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Is First Trust Materials AlphaDEX ETF (FXZ) a Strong ETF Right Now?
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Designed to provide broad exposure to the Materials ETFs category of the market, the First Trust Materials AlphaDEX ETF (FXZ - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FXZ has been able to amass assets over $205.47 million, making it one of the average sized ETFs in the Materials ETFs. Before fees and expenses, this particular fund seeks to match the performance of the StrataQuant Materials Index.
The StrataQuant Materials 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.61%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.73%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FXZ's heaviest allocation is in the Materials sector, which is about 82.5% of the portfolio. Its Industrials and Energy round out the top three.
When you look at individual holdings, Newmont Corporation (NEM) accounts for about 5.29% of the fund's total assets, followed by Alcoa Corporation (AA) and Anglogold Ashanti Plc (AU).
Its top 10 holdings account for approximately 45.28% of FXZ's total assets under management.
Performance and Risk
The ETF return is roughly 12.29% so far this year and is down about -2.4% in the last one year (as of 12/02/2025). In the past 52-week period, it has traded between $46.76 and $65.58
FXZ has a beta of 1.17 and standard deviation of 21.61% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers .
Alternatives
First Trust Materials AlphaDEX ETF is not a suitable option for investors seeking to outperform the Materials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.17 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $5.61 billion. XLB has an expense ratio of 0.08% and GUNR changes 0.46%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Materials 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 Materials AlphaDEX ETF (FXZ) a Strong ETF Right Now?
Designed to provide broad exposure to the Materials ETFs category of the market, the First Trust Materials AlphaDEX ETF (FXZ - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FXZ has been able to amass assets over $205.47 million, making it one of the average sized ETFs in the Materials ETFs. Before fees and expenses, this particular fund seeks to match the performance of the StrataQuant Materials Index.
The StrataQuant Materials 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.61%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.73%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FXZ's heaviest allocation is in the Materials sector, which is about 82.5% of the portfolio. Its Industrials and Energy round out the top three.
When you look at individual holdings, Newmont Corporation (NEM) accounts for about 5.29% of the fund's total assets, followed by Alcoa Corporation (AA) and Anglogold Ashanti Plc (AU).
Its top 10 holdings account for approximately 45.28% of FXZ's total assets under management.
Performance and Risk
The ETF return is roughly 12.29% so far this year and is down about -2.4% in the last one year (as of 12/02/2025). In the past 52-week period, it has traded between $46.76 and $65.58
FXZ has a beta of 1.17 and standard deviation of 21.61% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers .
Alternatives
First Trust Materials AlphaDEX ETF is not a suitable option for investors seeking to outperform the Materials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.17 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $5.61 billion. XLB has an expense ratio of 0.08% and GUNR changes 0.46%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Materials 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.