Designed to provide broad exposure to the Materials - Broad segment of the equity market, the First Trust Materials AlphaDEX ETF (FXZ) is a passively managed exchange traded fund launched on May 8, 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 6, placing it in top 38%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $203.71 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 0.61%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.74%.
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 Materials sector -- about 82.7% of the portfolio, followed by Industrials.
Looking at individual holdings, Newmont Corporation (NEM) accounts for about 5.29% of total assets, followed by Alcoa Corporation (AA) and Anglogold Ashanti Plc (AU).
The top 10 holdings account for about 45.28% of total assets under management.
Performance and Risk
So far this year, FXZ has added roughly 11.48%, and is down about 3.57% in the last one year (as of 12/03/2025). During this past 52-week period, the fund has traded between $46.76 and $64.76.
The ETF has a beta of 1.12 and standard deviation of 21.6% for the trailing three-year period, making it a medium risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Materials AlphaDEX ETF sports a Zacks ETF Rank of 5 (Strong Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FXZ, then, is not a suitable option for investors seeking exposure to the Materials ETFs segment of the market. However, there are better ETFs in the space to consider.
Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.12 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $5.59 billion. XLB has an expense ratio of 0.08%, and GUNR charges 0.46%.
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 Materials AlphaDEX ETF (FXZ): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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