Is First Trust Consumer Discretionary AlphaDEX ETF (FXD) a Strong ETF Right Now?

Designed to provide broad exposure to the Consumer Discretionary ETFs category of the market, the First Trust Consumer Discretionary AlphaDEX ETF (FXD) is a smart beta exchange traded fund launched on 05/08/2007.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

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.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

FXD is managed by First Trust Advisors, and this fund has amassed over $334.87 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. FXD seeks to match the performance of the StrataQuant Consumer Discretionary Index before fees and expenses.

The StrataQuant Consumer Discretionary Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.

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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.61%.

It has a 12-month trailing dividend yield of 1.04%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Representing 75.9% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Telecom and Industrials round out the top three.

When you look at individual holdings, Roblox Corporation (class A) (RBLX) accounts for about 1.75% of the fund's total assets, followed by D.r. Horton, Inc. (DHI) and Gentex Corporation (GNTX).

Its top 10 holdings account for approximately 16.24% of FXD's total assets under management.

Performance and Risk

The ETF has added about 7.49% and is up about 15.46% so far this year and in the past one year (as of 09/15/2025), respectively. FXD has traded between $50.42 and $70.29 during this last 52-week period.

FXD has a beta of 1.19 and standard deviation of 21.58% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 119 holdings, it effectively diversifies company-specific risk .

Alternatives

First Trust Consumer Discretionary AlphaDEX ETF is not a suitable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

Vanguard Consumer Discretionary ETF (VCR) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $6.49 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $24.42 billion. VCR has an expense ratio of 0.09% and XLY changes 0.08%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary ETFs

Bottom Line

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

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