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Is First Trust Materials AlphaDEX ETF (FXZ) a Strong ETF Right Now?
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Launched on 05/08/2007, the First Trust Materials AlphaDEX ETF (FXZ - Free Report) is a smart beta exchange traded fund offering broad exposure to the Materials ETFs category of the market.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by First Trust Advisors, FXZ has amassed assets over $295.66 million, making it one of the average sized ETFs in the Materials ETFs. FXZ seeks to match the performance of the StrataQuant Materials Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for FXZ are 0.64%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.50%.
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.
FXZ's heaviest allocation is in the Materials sector, which is about 82.7% of the portfolio. Its Industrials and Energy round out the top three.
When you look at individual holdings, Alcoa Corporation (AA) accounts for about 7.59% of the fund's total assets, followed by Anglogold Ashanti Plc (AU) and Newmont Corporation (NEM).
Its top 10 holdings account for approximately 48.51% of FXZ's total assets under management.
Performance and Risk
Year-to-date, the First Trust Materials AlphaDEX ETF return is roughly 15.7% so far, and is up roughly 28.96% over the last 12 months (as of 02/04/2026). FXZ has traded between $46.76 $75.00 in this past 52-week period.
The fund has a beta of 1.12 and standard deviation of 21.49% for the trailing three-year period, which makes FXZ a medium risk choice in this particular 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.
State Street 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. State Street Materials Select Sector SPDR ETF has $6.3 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $6.83 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?
Launched on 05/08/2007, the First Trust Materials AlphaDEX ETF (FXZ - Free Report) is a smart beta exchange traded fund offering broad exposure to the Materials ETFs category of the market.
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by First Trust Advisors, FXZ has amassed assets over $295.66 million, making it one of the average sized ETFs in the Materials ETFs. FXZ seeks to match the performance of the StrataQuant Materials Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for FXZ are 0.64%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.50%.
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.
FXZ's heaviest allocation is in the Materials sector, which is about 82.7% of the portfolio. Its Industrials and Energy round out the top three.
When you look at individual holdings, Alcoa Corporation (AA) accounts for about 7.59% of the fund's total assets, followed by Anglogold Ashanti Plc (AU) and Newmont Corporation (NEM).
Its top 10 holdings account for approximately 48.51% of FXZ's total assets under management.
Performance and Risk
Year-to-date, the First Trust Materials AlphaDEX ETF return is roughly 15.7% so far, and is up roughly 28.96% over the last 12 months (as of 02/04/2026). FXZ has traded between $46.76 $75.00 in this past 52-week period.
The fund has a beta of 1.12 and standard deviation of 21.49% for the trailing three-year period, which makes FXZ a medium risk choice in this particular 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.
State Street 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. State Street Materials Select Sector SPDR ETF has $6.3 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $6.83 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.