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Is First Trust Utilities AlphaDEX ETF (FXU) a Strong ETF Right Now?
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The First Trust Utilities AlphaDEX ETF (FXU - Free Report) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Utilities/Infrastructure 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
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
Because the fund has amassed over $893.48 million, this makes it one of the average sized ETFs in the Utilities/Infrastructure ETFs. FXU is managed by First Trust Advisors. This particular fund, before fees and expenses, seeks to match the performance of the StrataQuant Utilities Index.
The StrataQuant Utilities 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.61% for FXU, making it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.12%.
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.
For FXU, it has heaviest allocation in the Utilities sector --about 97.4% of the portfolio.
When you look at individual holdings, Edison International (EIX) accounts for about 4.43% of the fund's total assets, followed by National Fuel Gas Company (NFG) and Pg&e Corporation (PCG).
The top 10 holdings account for about 40.3% of total assets under management.
Performance and Risk
The ETF has gained about 10.31% and was up about 23.54% so far this year and in the past one year (as of 04/28/2026), respectively. FXU has traded between $41.16 and $51.33 during this last 52-week period.
The ETF has a beta of 0.69 and standard deviation of 15.38% for the trailing three-year period, making it a medium risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers .
Alternatives
First Trust Utilities AlphaDEX ETF is not a suitable option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Utilities Index Fund ETF Shares (VPU) tracks MSCI US Investable Market Utilities 25/50 Index and the State Street Utilities Select Sector SPDR ETF (XLU) tracks Utilities Select Sector Index. Vanguard Utilities Index Fund ETF Shares has $8.8 billion in assets, State Street Utilities Select Sector SPDR ETF has $24.25 billion. VPU has an expense ratio of 0.09% and XLU 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 Utilities/Infrastructure 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 Utilities AlphaDEX ETF (FXU) a Strong ETF Right Now?
The First Trust Utilities AlphaDEX ETF (FXU - Free Report) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Utilities/Infrastructure 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
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
Because the fund has amassed over $893.48 million, this makes it one of the average sized ETFs in the Utilities/Infrastructure ETFs. FXU is managed by First Trust Advisors. This particular fund, before fees and expenses, seeks to match the performance of the StrataQuant Utilities Index.
The StrataQuant Utilities 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.61% for FXU, making it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.12%.
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.
For FXU, it has heaviest allocation in the Utilities sector --about 97.4% of the portfolio.
When you look at individual holdings, Edison International (EIX) accounts for about 4.43% of the fund's total assets, followed by National Fuel Gas Company (NFG) and Pg&e Corporation (PCG).
The top 10 holdings account for about 40.3% of total assets under management.
Performance and Risk
The ETF has gained about 10.31% and was up about 23.54% so far this year and in the past one year (as of 04/28/2026), respectively. FXU has traded between $41.16 and $51.33 during this last 52-week period.
The ETF has a beta of 0.69 and standard deviation of 15.38% for the trailing three-year period, making it a medium risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers .
Alternatives
First Trust Utilities AlphaDEX ETF is not a suitable option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Utilities Index Fund ETF Shares (VPU) tracks MSCI US Investable Market Utilities 25/50 Index and the State Street Utilities Select Sector SPDR ETF (XLU) tracks Utilities Select Sector Index. Vanguard Utilities Index Fund ETF Shares has $8.8 billion in assets, State Street Utilities Select Sector SPDR ETF has $24.25 billion. VPU has an expense ratio of 0.09% and XLU 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 Utilities/Infrastructure 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.