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Is First Trust Financials AlphaDEX ETF (FXO) a Strong ETF Right Now?
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Launched on 05/08/2007, the First Trust Financials AlphaDEX ETF (FXO - Free Report) is a smart beta exchange traded fund offering broad exposure to the Financials 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FXO has been able to amass assets over $2.25 billion, making it one of the larger ETFs in the Financials ETFs. This particular fund, before fees and expenses, seeks to match the performance of the StrataQuant Financials Index.
The StrataQuant Financials 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.
Annual operating expenses for this ETF are 0.61%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.87%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 99.7% of the portfolio.
Looking at individual holdings, Bank Ozk (OZK) accounts for about 1.68% of total assets, followed by Invesco Ltd. (IVZ) and Interactive Brokers Group, Inc. (class A) (IBKR).
FXO's top 10 holdings account for about 16.07% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Financials AlphaDEX ETF return is roughly 10.08% so far, and it's up approximately 21.33% over the last 12 months (as of 08/25/2025). FXO has traded between $45.90 $59.11 in this past 52-week period.
The fund has a beta of 1.02 and standard deviation of 22.53% for the trailing three-year period, which makes FXO a medium risk choice in this particular space. With about 106 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Financials AlphaDEX ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Financials ETF (VFH) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $12.88 billion in assets, Financial Select Sector SPDR ETF has $52.3 billion. VFH has an expense ratio of 0.09% and XLF changes 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 Financials 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 Financials AlphaDEX ETF (FXO) a Strong ETF Right Now?
Launched on 05/08/2007, the First Trust Financials AlphaDEX ETF (FXO - Free Report) is a smart beta exchange traded fund offering broad exposure to the Financials 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FXO has been able to amass assets over $2.25 billion, making it one of the larger ETFs in the Financials ETFs. This particular fund, before fees and expenses, seeks to match the performance of the StrataQuant Financials Index.
The StrataQuant Financials 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.
Annual operating expenses for this ETF are 0.61%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.87%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 99.7% of the portfolio.
Looking at individual holdings, Bank Ozk (OZK) accounts for about 1.68% of total assets, followed by Invesco Ltd. (IVZ) and Interactive Brokers Group, Inc. (class A) (IBKR).
FXO's top 10 holdings account for about 16.07% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Financials AlphaDEX ETF return is roughly 10.08% so far, and it's up approximately 21.33% over the last 12 months (as of 08/25/2025). FXO has traded between $45.90 $59.11 in this past 52-week period.
The fund has a beta of 1.02 and standard deviation of 22.53% for the trailing three-year period, which makes FXO a medium risk choice in this particular space. With about 106 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Financials AlphaDEX ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Financials ETF (VFH) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $12.88 billion in assets, Financial Select Sector SPDR ETF has $52.3 billion. VFH has an expense ratio of 0.09% and XLF changes 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 Financials 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.