The First Trust Technology AlphaDEX ETF (FXL) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by First Trust Advisors, FXL has amassed assets over $1.37 billion, making it one of the larger ETFs in the Technology ETFs. Before fees and expenses, FXL seeks to match the performance of the StrataQuant Technology Index.
The StrataQuant Technology 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
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 cousins, other things remaining the same.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.03%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 80.9% of the portfolio. Industrials and Telecom round out the top three.
Taking into account individual holdings, Concentrix Corporation (CNXC) accounts for about 1.77% of the fund's total assets, followed by Amkor Technology, Inc. (AMKR) and Dxc Technology Company (DXC).
FXL's top 10 holdings account for about 16.85% of its total assets under management.
Performance and Risk
So far this year, FXL has added about 7.39%, and is up roughly 17.25% in the last one year (as of 07/22/2025). During this past 52-week period, the fund has traded between $115.28 and $160.72.
The ETF has a beta of 1.16 and standard deviation of 24.52% for the trailing three-year period, making it a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Technology AlphaDEX ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Technology Select Sector SPDR ETF (XLK) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $83.05 billion in assets, Vanguard Information Technology ETF has $97.48 billion. XLK has an expense ratio of 0.08% and VGT changes 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology 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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First Trust Technology AlphaDEX ETF (FXL): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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