Designed to provide broad exposure to the Materials - Broad segment of the equity market, the First Trust Materials AlphaDEX ETF (FXZ Quick QuoteFXZ - Free Report) is a passively managed exchange traded fund launched on May 8, 2007.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $300.44 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. 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.

Costs

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 0.64%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.48%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Materials sector -- about 83.3% of the portfolio, followed by Industrials.

Looking at individual holdings, Alcoa Corporation (AA) accounts for about 7.59% of total assets, followed by Anglogold Ashanti Plc (AU) and Newmont Corporation (NEM).

The top 10 holdings account for about 48.51% of total assets under management.

Performance and Risk

So far this year, FXZ has added about 17.33%, and is up roughly 29.05% in the last one year (as of 02/05/2026). During this past 52-week period, the fund has traded between $46.76 and $76.06.

The ETF has a beta of 1.12 and standard deviation of 21.49% for the trailing three-year period, making it a medium risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.

Alternatives

First Trust Materials AlphaDEX ETF sports a Zacks ETF Rank of 5 (Strong Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FXZ, then, is not a suitable option for investors seeking exposure to the Materials ETFs segment of the market. However, there are better ETFs in the space to 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 $6.44 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $6.86 billion. XLB has an expense ratio of 0.08%, and GUNR charges 0.46%.

Bottom Line

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