The First Trust Materials AlphaDEX ETF (FXZ), a $215.12 million smart beta fund launched in 2007, targets the Materials sector by employing the AlphaDEX screening methodology to potentially generate alpha over traditional passive indices. With an expense ratio of 0.61% and a concentrated portfolio of 38 holdings, FXZ has seen a 3.53% gain year-to-date but a 10.41% decline over the last year (as of 07/31/2025). This positions it as a medium-risk option for investors seeking active exposure within the materials space, albeit at a higher cost and with a more volatile performance profile compared to larger, market-cap weighted peers.
The First Trust Materials AlphaDEX ETF (FXZ) is a smart beta fund offering tactical exposure to the materials sector, positioned as an alternative to traditional market-cap-weighted indices. With $215.12 million in assets, it is a mid-sized ETF that employs the StrataQuant Materials Index methodology to select stocks from the Russell 1000 with the potential for alpha generation. This active selection strategy results in a relatively high expense ratio of 0.61%, which is significantly more expensive than passive peers like the Materials Select Sector SPDR ETF (XLB) at 0.08%. The fund's performance has been mixed, posting a 3.53% year-to-date gain but a substantial 10.41% loss over the past year as of July 31, 2025. Its risk profile is elevated, with a beta of 1.12 and a three-year standard deviation of 23.42%, indicating higher volatility than the broader market. Furthermore, the portfolio is concentrated, with only 38 holdings and the top ten constituents, including Eastman Chemical (EMN) and Alcoa (AA), accounting for 44.65% of total assets, making the fund's performance highly dependent on a small number of stocks.
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