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Is First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR) a Strong ETF Right Now?
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Designed to provide broad exposure to the Industrials ETFs category of the market, the First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.58 billion, this makes it one of the larger ETFs in the Industrials ETFs. FXR is managed by First Trust Advisors. FXR, before fees and expenses, seeks to match the performance of the StrataQuant Industrials Index.
The StrataQuant Industrials 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 0.61% for this ETF, which makes it one of the more expensive products in the space.
FXR's 12-month trailing dividend yield is 0.86%.
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.
For FXR, it has heaviest allocation in the Industrials sector --about 70.80% of the portfolio --while Materials and Information Technology round out the top three.
Looking at individual holdings, Hayward Holdings, Inc. (HAYW - Free Report) accounts for about 1.63% of total assets, followed by Axon Enterprise Inc. (AXON - Free Report) and Xpo, Inc. (XPO - Free Report) .
FXR's top 10 holdings account for about 14.02% of its total assets under management.
Performance and Risk
So far this year, FXR has gained about 6.74%, and is down about -3.24% in the last one year (as of 01/26/2023). During this past 52-week period, the fund has traded between $45.72 and $58.94.
The fund has a beta of 1.22 and standard deviation of 29.48% for the trailing three-year period, which makes FXR a medium risk choice in this particular space. With about 130 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust IndustrialsProducer Durables AlphaDEX ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $3.76 billion in assets, Industrial Select Sector SPDR ETF has $13.93 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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 IndustrialsProducer Durables AlphaDEX ETF (FXR) a Strong ETF Right Now?
Designed to provide broad exposure to the Industrials ETFs category of the market, the First Trust IndustrialsProducer Durables AlphaDEX ETF (FXR - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.58 billion, this makes it one of the larger ETFs in the Industrials ETFs. FXR is managed by First Trust Advisors. FXR, before fees and expenses, seeks to match the performance of the StrataQuant Industrials Index.
The StrataQuant Industrials 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 0.61% for this ETF, which makes it one of the more expensive products in the space.
FXR's 12-month trailing dividend yield is 0.86%.
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.
For FXR, it has heaviest allocation in the Industrials sector --about 70.80% of the portfolio --while Materials and Information Technology round out the top three.
Looking at individual holdings, Hayward Holdings, Inc. (HAYW - Free Report) accounts for about 1.63% of total assets, followed by Axon Enterprise Inc. (AXON - Free Report) and Xpo, Inc. (XPO - Free Report) .
FXR's top 10 holdings account for about 14.02% of its total assets under management.
Performance and Risk
So far this year, FXR has gained about 6.74%, and is down about -3.24% in the last one year (as of 01/26/2023). During this past 52-week period, the fund has traded between $45.72 and $58.94.
The fund has a beta of 1.22 and standard deviation of 29.48% for the trailing three-year period, which makes FXR a medium risk choice in this particular space. With about 130 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust IndustrialsProducer Durables AlphaDEX ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $3.76 billion in assets, Industrial Select Sector SPDR ETF has $13.93 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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.