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Is First Trust Materials AlphaDEX ETF (FXZ) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Materials AlphaDEX ETF (FXZ - Free Report) debuted on 05/08/2007, and offers broad exposure to the Materials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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
FXZ is managed by First Trust Advisors, and this fund has amassed over $365.7 million, which makes 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.
Operating expenses on an annual basis are 0.64% for FXZ, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.46%.
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.
Representing 83.3% of the portfolio, the fund has heaviest allocation to the Materials sector; Industrials and Energy round out the top three.
Taking into account individual holdings, Cf Industries Holdings, Inc. (CF) accounts for about 5.91% of the fund's total assets, followed by Anglogold Ashanti Plc (AU) and Newmont Corporation (NEM).
The top 10 holdings account for about 46.06% of total assets under management.
Performance and Risk
The ETF has gained about 23.07% and is up roughly 72.56% so far this year and in the past one year (as of 04/09/2026), respectively. FXZ has traded between $49.32 and $79.73 during this last 52-week period.
FXZ has a beta of 1.07 and standard deviation of 21.59% 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.
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 $6.84 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.65 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?
A smart beta exchange traded fund, the First Trust Materials AlphaDEX ETF (FXZ - Free Report) debuted on 05/08/2007, and offers broad exposure to the Materials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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
FXZ is managed by First Trust Advisors, and this fund has amassed over $365.7 million, which makes 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.
Operating expenses on an annual basis are 0.64% for FXZ, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.46%.
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.
Representing 83.3% of the portfolio, the fund has heaviest allocation to the Materials sector; Industrials and Energy round out the top three.
Taking into account individual holdings, Cf Industries Holdings, Inc. (CF) accounts for about 5.91% of the fund's total assets, followed by Anglogold Ashanti Plc (AU) and Newmont Corporation (NEM).
The top 10 holdings account for about 46.06% of total assets under management.
Performance and Risk
The ETF has gained about 23.07% and is up roughly 72.56% so far this year and in the past one year (as of 04/09/2026), respectively. FXZ has traded between $49.32 and $79.73 during this last 52-week period.
FXZ has a beta of 1.07 and standard deviation of 21.59% 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.
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 $6.84 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.65 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.