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Is First Trust Energy AlphaDEX ETF (FXN) a Strong ETF Right Now?
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Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Energy AlphaDEX ETF (FXN - Free Report) provides investors broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 managed by First Trust Advisors, and has been able to amass over $298.58 million, which makes it one of the average sized ETFs in the Energy ETFs. Before fees and expenses, FXN seeks to match the performance of the StrataQuant Energy Index.
The StrataQuant Energy 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.61% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.77%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 97% of the portfolio, the fund has heaviest allocation to the Energy sector.
Taking into account individual holdings, Devon Energy Corporation (DVN - Free Report) accounts for about 4.66% of the fund's total assets, followed by Ovintiv Inc. (OVV - Free Report) and Nov Inc. (NOV - Free Report) .
The top 10 holdings account for about 39.81% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Energy AlphaDEX ETF has lost about -3.01% so far, and is down about -12.32% over the last 12 months (as of 05/14/2025). FXN has traded between $12.88 and $18.89 in this past 52-week period.
The fund has a beta of 0.89 and standard deviation of 29.52% for the trailing three-year period, which makes FXN a high risk choice in this particular space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Energy AlphaDEX ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $7.10 billion in assets, Energy Select Sector SPDR ETF has $27.91 billion. VDE has an expense ratio of 0.09% and XLE 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 Energy 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 Energy AlphaDEX ETF (FXN) a Strong ETF Right Now?
Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Energy AlphaDEX ETF (FXN - Free Report) provides investors broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 managed by First Trust Advisors, and has been able to amass over $298.58 million, which makes it one of the average sized ETFs in the Energy ETFs. Before fees and expenses, FXN seeks to match the performance of the StrataQuant Energy Index.
The StrataQuant Energy 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.61% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.77%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 97% of the portfolio, the fund has heaviest allocation to the Energy sector.
Taking into account individual holdings, Devon Energy Corporation (DVN - Free Report) accounts for about 4.66% of the fund's total assets, followed by Ovintiv Inc. (OVV - Free Report) and Nov Inc. (NOV - Free Report) .
The top 10 holdings account for about 39.81% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Energy AlphaDEX ETF has lost about -3.01% so far, and is down about -12.32% over the last 12 months (as of 05/14/2025). FXN has traded between $12.88 and $18.89 in this past 52-week period.
The fund has a beta of 0.89 and standard deviation of 29.52% for the trailing three-year period, which makes FXN a high risk choice in this particular space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Energy AlphaDEX ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $7.10 billion in assets, Energy Select Sector SPDR ETF has $27.91 billion. VDE has an expense ratio of 0.09% and XLE 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 Energy 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.