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Is First Trust Consumer Staples AlphaDEX ETF (FXG) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Consumer Staples AlphaDEX ETF (FXG - Free Report) debuted on 05/08/2007, and offers broad exposure to the Consumer Staples ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $282.44 million, making it one of the average sized ETFs in the Consumer Staples ETFs. FXG, before fees and expenses, seeks to match the performance of the StrataQuant Consumer Staples Index.
The StrataQuant Consumer Staples Index is a modified equal-dollar weighted index designed by the AMEX to objectively identify and select stocks from the Russell 1000 Index that may generate positive alpha relative to traditional passive style indices through the use of the AlphaDEX screening methodology.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for FXG are 0.62%, which makes it one of the most expensive products in the space.
FXG's 12-month trailing dividend yield is 1.70%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector - about 86.40% of the portfolio. Healthcare and Materials round out the top three.
When you look at individual holdings, Cvs Health Corporation (CVS - Free Report) accounts for about 5.03% of the fund's total assets, followed by Darling Ingredients Inc. (DAR - Free Report) and Pilgrim's Pride Corporation (PPC - Free Report) .
Its top 10 holdings account for approximately 41.31% of FXG's total assets under management.
Performance and Risk
So far this year, FXG has lost about -0.03%, and is down about -0.41% in the last one year (as of 03/07/2025). During this past 52-week period, the fund has traded between $62.56 and $70.06.
The fund has a beta of 0.66 and standard deviation of 13.21% for the trailing three-year period, which makes FXG a medium risk choice in this particular space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Consumer Staples AlphaDEX ETF is a reasonable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Consumer Staples ETF (VDC - Free Report) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP - Free Report) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $7.39 billion in assets, Consumer Staples Select Sector SPDR ETF has $16.99 billion. VDC has an expense ratio of 0.09% and XLP charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Staples ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is First Trust Consumer Staples AlphaDEX ETF (FXG) a Strong ETF Right Now?
A smart beta exchange traded fund, the First Trust Consumer Staples AlphaDEX ETF (FXG - Free Report) debuted on 05/08/2007, and offers broad exposure to the Consumer Staples ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $282.44 million, making it one of the average sized ETFs in the Consumer Staples ETFs. FXG, before fees and expenses, seeks to match the performance of the StrataQuant Consumer Staples Index.
The StrataQuant Consumer Staples Index is a modified equal-dollar weighted index designed by the AMEX to objectively identify and select stocks from the Russell 1000 Index that may generate positive alpha relative to traditional passive style indices through the use of the AlphaDEX screening methodology.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for FXG are 0.62%, which makes it one of the most expensive products in the space.
FXG's 12-month trailing dividend yield is 1.70%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector - about 86.40% of the portfolio. Healthcare and Materials round out the top three.
When you look at individual holdings, Cvs Health Corporation (CVS - Free Report) accounts for about 5.03% of the fund's total assets, followed by Darling Ingredients Inc. (DAR - Free Report) and Pilgrim's Pride Corporation (PPC - Free Report) .
Its top 10 holdings account for approximately 41.31% of FXG's total assets under management.
Performance and Risk
So far this year, FXG has lost about -0.03%, and is down about -0.41% in the last one year (as of 03/07/2025). During this past 52-week period, the fund has traded between $62.56 and $70.06.
The fund has a beta of 0.66 and standard deviation of 13.21% for the trailing three-year period, which makes FXG a medium risk choice in this particular space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Consumer Staples AlphaDEX ETF is a reasonable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Consumer Staples ETF (VDC - Free Report) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP - Free Report) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $7.39 billion in assets, Consumer Staples Select Sector SPDR ETF has $16.99 billion. VDC has an expense ratio of 0.09% and XLP charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Staples ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.