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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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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
Managed by First Trust Advisors, FXO has amassed assets over $2.16 billion, making it one of the larger ETFs in the Financials ETFs. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are 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 1.85%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 100% of the portfolio.
Taking into account individual holdings, Sofi Technologies, Inc. (SOFI) accounts for about 1.81% of the fund's total assets, followed by American International Group, Inc. (AIG) and T. Rowe Price Group, Inc. (TROW).
Its top 10 holdings account for approximately 17.28% of FXO's total assets under management.
Performance and Risk
Year-to-date, the First Trust Financials AlphaDEX ETF has gained about 7.72% so far, and was up about 10.09% over the last 12 months (as of 10/27/2025). FXO has traded between $45.90 $60.32 in this past 52-week period.
The fund has a beta of 1.04 and standard deviation of 21.75% for the trailing three-year period, which makes FXO a medium risk choice in this particular space. With about 105 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 $12.97 billion in assets, Financial Select Sector SPDR ETF has $53.88 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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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
Managed by First Trust Advisors, FXO has amassed assets over $2.16 billion, making it one of the larger ETFs in the Financials ETFs. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are 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 1.85%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 100% of the portfolio.
Taking into account individual holdings, Sofi Technologies, Inc. (SOFI) accounts for about 1.81% of the fund's total assets, followed by American International Group, Inc. (AIG) and T. Rowe Price Group, Inc. (TROW).
Its top 10 holdings account for approximately 17.28% of FXO's total assets under management.
Performance and Risk
Year-to-date, the First Trust Financials AlphaDEX ETF has gained about 7.72% so far, and was up about 10.09% over the last 12 months (as of 10/27/2025). FXO has traded between $45.90 $60.32 in this past 52-week period.
The fund has a beta of 1.04 and standard deviation of 21.75% for the trailing three-year period, which makes FXO a medium risk choice in this particular space. With about 105 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 $12.97 billion in assets, Financial Select Sector SPDR ETF has $53.88 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.