FXZ is one of First Trust’s several AlphaDex ETFs. AlphaDex is a quantitative approach designed to beat the broad market through what some call active indexing. In essence, AlphaDex ETFs divide stocks by growth, core and value, and then assign them scores based on various metrics.
In the case of FXZ, the methodology picks stocks from the Russell 1000 using several growth and value factors. FXZ looks at three-, six- and 12-month price appreciation, sales-to-price and one-year sales growth as its growth metrics, and book-value-to-price, cash-flow-to-price and return-on-assets as its value metrics.
The index then looks at the growth and value scores following this selection process, and selects the top 75% names in the materials sectors based on these scores, according to First Trust. The resulting portfolio often tilts toward smaller-cap names, and can show segment concentration at times, our data show.
Launched in 2007, FXZ has $344 million in assets. The fund’s expense ratio is 0.66%, and trades with an average spread of 0.05%, meaning investors are shelling out about 0.71% to own and trade this ETF, or $71 per $10,000 invested.
Charts courtesy of StockCharts.com
Contact Cinthia Murphy at [email protected]