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Is First Trust Energy AlphaDEX ETF (FXN) a Strong ETF Right Now?
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Designed to provide broad exposure to the Energy ETFs category of the market, the First Trust Energy AlphaDEX ETF (FXN - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
Because the fund has amassed over $342.43 million, this makes it one of the average sized ETFs in the Energy ETFs. FXN is managed by First Trust Advisors. FXN seeks to match the performance of the StrataQuant Energy Index before fees and expenses.
The StrataQuant Energy 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
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.
Operating expenses on an annual basis are 0.61% for this ETF, which makes it on par with most peer products in the space.
FXN's 12-month trailing dividend yield is 2.65%.
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.
FXN's heaviest allocation is in the Energy sector, which is about 97.10% of the portfolio.
When you look at individual holdings, Nov Inc. (NOV - Free Report) accounts for about 4.36% of the fund's total assets, followed by Ovintiv Inc. (OVV - Free Report) and Civitas Resources, Inc. (CIVI - Free Report) .
The top 10 holdings account for about 39.85% of total assets under management.
Performance and Risk
The ETF has lost about -5.63% and is down about -9.45% so far this year and in the past one year (as of 03/11/2025), respectively. FXN has traded between $15.25 and $19.35 during this last 52-week period.
FXN has a beta of 1.57 and standard deviation of 27.96% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Energy AlphaDEX ETF is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $7.50 billion in assets, Energy Select Sector SPDR ETF has $31.58 billion. VDE has an expense ratio of 0.09% and XLE charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy 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 Energy AlphaDEX ETF (FXN) a Strong ETF Right Now?
Designed to provide broad exposure to the Energy ETFs category of the market, the First Trust Energy AlphaDEX ETF (FXN - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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
Because the fund has amassed over $342.43 million, this makes it one of the average sized ETFs in the Energy ETFs. FXN is managed by First Trust Advisors. FXN seeks to match the performance of the StrataQuant Energy Index before fees and expenses.
The StrataQuant Energy 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
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.
Operating expenses on an annual basis are 0.61% for this ETF, which makes it on par with most peer products in the space.
FXN's 12-month trailing dividend yield is 2.65%.
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.
FXN's heaviest allocation is in the Energy sector, which is about 97.10% of the portfolio.
When you look at individual holdings, Nov Inc. (NOV - Free Report) accounts for about 4.36% of the fund's total assets, followed by Ovintiv Inc. (OVV - Free Report) and Civitas Resources, Inc. (CIVI - Free Report) .
The top 10 holdings account for about 39.85% of total assets under management.
Performance and Risk
The ETF has lost about -5.63% and is down about -9.45% so far this year and in the past one year (as of 03/11/2025), respectively. FXN has traded between $15.25 and $19.35 during this last 52-week period.
FXN has a beta of 1.57 and standard deviation of 27.96% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Energy AlphaDEX ETF is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $7.50 billion in assets, Energy Select Sector SPDR ETF has $31.58 billion. VDE has an expense ratio of 0.09% and XLE charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy 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.