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Should You Invest in the First Trust Materials AlphaDEX ETF (FXZ)?
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Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the First Trust Materials AlphaDEX ETF (FXZ - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
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.
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 8, placing it in top 50%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $453.94 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.67%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.24%.
Sector Exposure and Top Holdings
ETFs offer a 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.
This ETF has heaviest allocation in the Materials sector--about 88.60% of the portfolio, followed by Industrials.
Looking at individual holdings, Steel Dynamics, Inc. (STLD - Free Report) accounts for about 5.31% of total assets, followed by Newmont Corporation (NEM - Free Report) and Royal Gold, Inc. (RGLD - Free Report) .
The top 10 holdings account for about 43.43% of total assets under management.
Performance and Risk
The ETF has gained about 20.52% so far this year and is up about 61.43% in the last one year (as of 08/03/2021). In that past 52-week period, it has traded between $36.43 and $63.15.
The ETF has a beta of 1.28 and standard deviation of 31.03% 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 holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FXZ is a great option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF (XLB - Free Report) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $5.44 billion in assets, Materials Select Sector SPDR ETF has $8.72 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.12%.
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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Should You Invest in the First Trust Materials AlphaDEX ETF (FXZ)?
Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the First Trust Materials AlphaDEX ETF (FXZ - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
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.
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 8, placing it in top 50%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $453.94 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.67%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.24%.
Sector Exposure and Top Holdings
ETFs offer a 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.
This ETF has heaviest allocation in the Materials sector--about 88.60% of the portfolio, followed by Industrials.
Looking at individual holdings, Steel Dynamics, Inc. (STLD - Free Report) accounts for about 5.31% of total assets, followed by Newmont Corporation (NEM - Free Report) and Royal Gold, Inc. (RGLD - Free Report) .
The top 10 holdings account for about 43.43% of total assets under management.
Performance and Risk
The ETF has gained about 20.52% so far this year and is up about 61.43% in the last one year (as of 08/03/2021). In that past 52-week period, it has traded between $36.43 and $63.15.
The ETF has a beta of 1.28 and standard deviation of 31.03% 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 holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FXZ is a great option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF (XLB - Free Report) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $5.44 billion in assets, Materials Select Sector SPDR ETF has $8.72 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.12%.
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.