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Is First Trust Health Care AlphaDEX ETF (FXH) a Strong ETF Right Now?
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Launched on 05/08/2007, the First Trust Health Care AlphaDEX ETF (FXH - Free Report) is a smart beta exchange traded fund offering broad exposure to the Health Care 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
FXH is managed by First Trust Advisors, and this fund has amassed over $1.27 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.62%, making it on par with most peer products in the space.
FXH's 12-month trailing dividend yield is 0.35%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Healthcare sector.
Looking at individual holdings, Natera, Inc. (NTRA - Free Report) accounts for about 2.70% of total assets, followed by United Therapeutics Corporation (UTHR - Free Report) and Eli Lilly And Company (LLY - Free Report) .
FXH's top 10 holdings account for about 23.07% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Health Care AlphaDEX ETF has added about 6.01% so far, and it's up approximately 2.78% over the last 12 months (as of 07/31/2024). FXH has traded between $90.04 and $109.59 in this past 52-week period.
The fund has a beta of 0.76 and standard deviation of 16.52% for the trailing three-year period, which makes FXH a medium risk choice in this particular space. With about 82 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is an excellent option for investors seeking to outperform the Health Care ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $18.31 billion in assets, Health Care Select Sector SPDR ETF has $40.97 billion. VHT has an expense ratio of 0.10% and XLV charges 0.09%.
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?
Launched on 05/08/2007, the First Trust Health Care AlphaDEX ETF (FXH - Free Report) is a smart beta exchange traded fund offering broad exposure to the Health Care 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
FXH is managed by First Trust Advisors, and this fund has amassed over $1.27 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.62%, making it on par with most peer products in the space.
FXH's 12-month trailing dividend yield is 0.35%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Healthcare sector.
Looking at individual holdings, Natera, Inc. (NTRA - Free Report) accounts for about 2.70% of total assets, followed by United Therapeutics Corporation (UTHR - Free Report) and Eli Lilly And Company (LLY - Free Report) .
FXH's top 10 holdings account for about 23.07% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Health Care AlphaDEX ETF has added about 6.01% so far, and it's up approximately 2.78% over the last 12 months (as of 07/31/2024). FXH has traded between $90.04 and $109.59 in this past 52-week period.
The fund has a beta of 0.76 and standard deviation of 16.52% for the trailing three-year period, which makes FXH a medium risk choice in this particular space. With about 82 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Health Care AlphaDEX ETF is an excellent option for investors seeking to outperform the Health Care ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $18.31 billion in assets, Health Care Select Sector SPDR ETF has $40.97 billion. VHT has an expense ratio of 0.10% and XLV charges 0.09%.
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.