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

If you're interested in broad exposure to the Industrials - Broad segment of the equity market, look no further than the First Trust Industrials/Producer Durables AlphaDEX ETF (FXR), 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. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.74 billion, making it one of the larger ETFs attempting to match the performance of the Industrials - Broad segment of the equity market. FXR seeks to match the performance of the StrataQuant Industrials Index before fees and expenses.

The StrataQuant Industrials 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.83%.

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 Industrials sector--about 63.50% of the portfolio. Financials and Materials round out the top three.

Looking at individual holdings, Genpact Limited (G) accounts for about 1.55% of total assets, followed by Howmet Aerospace Inc. (HWM) and Adt Inc. (ADT).

The top 10 holdings account for about 13.65% of total assets under management.

Performance and Risk

So far this year, FXR has lost about -7.18%, and is down about -4.19% in the last one year (as of 03/31/2025). During this past 52-week period, the fund has traded between $66.85 and $83.27.

The ETF has a beta of 1.21 and standard deviation of 20.05% for the trailing three-year period, making it a medium risk choice in the space. With about 137 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Industrials/Producer Durables AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FXR is a good option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Industrials ETF (VIS) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $5.30 billion in assets, Industrial Select Sector SPDR ETF has $19.70 billion. VIS has an expense ratio of 0.09% and XLI charges 0.08%.

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research