Should You Invest in the First Trust Industrials/Producer Durables AlphaDEX ETF (FXR)?

The First Trust Industrials/Producer Durables AlphaDEX ETF (FXR), with $1.75 billion in assets, seeks to mirror the StrataQuant Industrials Index and has a 0.60% expense ratio with a 0.80% dividend yield. FXR's largest sector allocation is in Industrials at 69.50%, with top holdings including Howmet Aerospace Inc. (1.47%) and Huntington Ingalls Industries, Inc.; the ETF is up 4.05% over the past year but down -4.28% year-to-date, and carries a Zacks ETF Rank of 3 (Hold).

Analysis

The First Trust Industrials/Producer Durables AlphaDEX ETF (FXR), with $1.75 billion in assets under management, offers exposure to the Industrials - Broad equity segment by tracking the StrataQuant Industrials Index, which utilizes the AlphaDEX screening methodology to select stocks from the Russell 1000 Index aiming for positive alpha. FXR's annual operating expense ratio is 0.60%, which the article notes as 'on par with most peer products,' though significantly higher than alternatives like Vanguard Industrials ETF (VIS) at 0.09% and Industrial Select Sector SPDR ETF (XLI) at 0.08%. The ETF has a 12-month trailing dividend yield of 0.80%. Performance has been mixed, with a 4.05% gain over the past year as of June 2, 2025, but a year-to-date loss of 4.28%. The fund is diversified across approximately 137 holdings, with the top 10 constituting 13.24% of assets, thereby mitigating single-stock risk; Howmet Aerospace Inc. (HWM) is the largest holding at 1.47%. Notably, the Industrials - Broad sector, which accounts for 69.50% of FXR's portfolio, is currently ranked 10th out of 16 Zacks sectors, placing it in the bottom 38%, indicating potential headwinds. FXR carries a Zacks ETF Rank of 3 (Hold) and displays medium risk characteristics with a beta of 1.16 and a three-year standard deviation of 21.11%.

Key Decisions for Investors

• Investors should carefully evaluate FXR's alpha-seeking strategy and its 0.60% expense ratio in the context of the Industrials - Broad sector's current low ranking (bottom 38% per Zacks) and the ETF's recent year-to-date loss of 4.28%.
• Consider comparing FXR to lower-cost and larger industrials ETFs such as VIS (0.09% expense ratio) and XLI (0.08% expense ratio), especially if seeking more traditional, broad-market beta exposure with lower fees.
• Given the Zacks ETF Rank of 3 (Hold) and mixed performance, current investors might maintain positions but should closely monitor the ETF's ability to generate alpha relative to its higher costs and the challenging sector environment.