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Is First Trust Health Care AlphaDEX ETF (FXH) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Health Care AlphaDEX ETF (FXH - Free Report) debuted on 05/08/2007, and offers broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $1.21 billion, which makes it one of the larger ETFs in the Health Care ETFs. FXH seeks to match the performance of the StrataQuant Health Care Index before fees and expenses.
The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.61%.
It's 12-month trailing dividend yield comes in at 0.25%.
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.
FXH's heaviest allocation is in the Healthcare sector, which is about 100% of the portfolio.
When you look at individual holdings, Medpace Holdings, Inc. (MEDP - Free Report) accounts for about 2.28% of the fund's total assets, followed by Viatris Inc. (VTRS - Free Report) and Encompass Health Corporation (EHC - Free Report) .
FXH's top 10 holdings account for about 20.42% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Health Care AlphaDEX ETF has lost about -12.75% so far, and is down about -9.32% over the last 12 months (as of 11/20/2023). FXH has traded between $90.04 and $114.21 in this past 52-week period.
The fund has a beta of 0.78 and standard deviation of 16.97% for the trailing three-year period, which makes FXH a medium risk choice in this particular space. With about 86 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Health Care ETF (VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV - Free Report) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $15.80 billion in assets, Health Care Select Sector SPDR ETF has $36.59 billion. VHT has an expense ratio of 0.10% and XLV 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 Health Care 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 Health Care AlphaDEX ETF (FXH) a Strong ETF Right Now?
A smart beta exchange traded fund, the First Trust Health Care AlphaDEX ETF (FXH - Free Report) debuted on 05/08/2007, and offers broad exposure to the Health Care ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $1.21 billion, which makes it one of the larger ETFs in the Health Care ETFs. FXH seeks to match the performance of the StrataQuant Health Care Index before fees and expenses.
The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.61%.
It's 12-month trailing dividend yield comes in at 0.25%.
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.
FXH's heaviest allocation is in the Healthcare sector, which is about 100% of the portfolio.
When you look at individual holdings, Medpace Holdings, Inc. (MEDP - Free Report) accounts for about 2.28% of the fund's total assets, followed by Viatris Inc. (VTRS - Free Report) and Encompass Health Corporation (EHC - Free Report) .
FXH's top 10 holdings account for about 20.42% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Health Care AlphaDEX ETF has lost about -12.75% so far, and is down about -9.32% over the last 12 months (as of 11/20/2023). FXH has traded between $90.04 and $114.21 in this past 52-week period.
The fund has a beta of 0.78 and standard deviation of 16.97% for the trailing three-year period, which makes FXH a medium risk choice in this particular space. With about 86 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Health Care ETF (VHT - Free Report) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV - Free Report) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $15.80 billion in assets, Health Care Select Sector SPDR ETF has $36.59 billion. VHT has an expense ratio of 0.10% and XLV 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 Health Care 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.