Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the First Trust Materials AlphaDEX ETF (FXZ), a passively managed exchange traded fund launched on 05/08/2007.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $317.80 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. FXZ seeks to match the performance of the StrataQuant Materials Index before fees and expenses.

The StrataQuant Materials 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.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.62%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.59%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Materials sector--about 88.20% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Fmc Corporation (FMC) accounts for about 5.24% of total assets, followed by Reliance Inc. (RS) and Celanese Corporation (CE).

The top 10 holdings account for about 44.42% of total assets under management.

Performance and Risk

So far this year, FXZ has lost about -7.67%, and is up roughly 1.73% in the last one year (as of 11/18/2024). During this past 52-week period, the fund has traded between $61.20 and $72.04.