The First Trust Industrials/Producer Durables AlphaDEX ETF (FXR) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
Because the fund has amassed over $821.09 million, this makes it one of the average sized ETFs in the Industrials ETFs. FXR is managed by First Trust Advisors. This particular fund 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.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.60%.
The fund has a 12-month trailing dividend yield of 0.66%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 72.3% of the portfolio, the fund has heaviest allocation to the Industrials sector; Materials and Financials round out the top three.
Looking at individual holdings, Kirby Corporation (KEX) accounts for about 1.58% of total assets, followed by Knight-swift Transportation Holdings Inc. (KNX) and Schneider National, Inc. (class B) (SNDR).
The top 10 holdings account for about 13.86% of total assets under management.
Performance and Risk
The ETF has added about 8.23% and is up about 14.34% so far this year and in the past one year (as of 01/15/2026), respectively. FXR has traded between $60.85 and $86.44 during this last 52-week period.
The fund has a beta of 1.13 and standard deviation of 19.04% for the trailing three-year period, which makes FXR a medium risk choice in this particular space. With about 143 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Industrials/Producer Durables AlphaDEX ETF is not a suitable option for investors seeking to outperform the Industrials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
First Trust RBA American Industrial Renaissance ETF (AIRR) tracks Richard Bernstein Advisors American Industrial Renaissance Index and the State Street Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. First Trust RBA American Industrial Renaissance ETF has $7.46 billion in assets, State Street Industrial Select Sector SPDR ETF has $27.86 billion. AIRR has an expense ratio of 0.70% and XLI 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 Industrials 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 Industrials/Producer Durables AlphaDEX ETF (FXR): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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