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

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many 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 13, placing it in bottom 19%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $372 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

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 1.33%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Materials sector -- about 85.9% of the portfolio, followed by Industrials.

Looking at individual holdings, Newmont Corporation (NEM) accounts for about 5.9% of total assets, followed by Anglogold Ashanti Plc (AU) and Coeur Mining, Inc. (CDE).

The top 10 holdings account for about 44.75% of total assets under management.

Performance and Risk

The ETF return is roughly 20.42% so far this year and it's up approximately 27.69% in the last one year (as of 10/14/2026). In that past 52-week period, it has traded between $57.87 and $87.56.

The ETF has a beta of 1.07 and standard deviation of 22.05% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.

Alternatives

First Trust Materials AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FXZ is a good option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Northern Trust Mrngstr Glob Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index and the State Street Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index. Northern Trust Mrngstr Glob Upstream Natural Resources ETF has $7.12 billion in assets, State Street Materials Select Sector SPDR ETF has $7.87 billion. GUNR has an expense ratio of 0.46%, and XLB charges 0.08%.

Bottom Line

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