The First Trust Health Care AlphaDEX ETF (FXH) was launched on 05/08/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Health Care ETFs category of the market.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by First Trust Advisors, FXH has amassed assets over $921.4 million, making it one of the larger ETFs in the Health Care ETFs. This particular fund, before fees and expenses, seeks to match the performance of the StrataQuant Health Care Index.
The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.61%.
The fund has a 12-month trailing dividend yield of 0.74%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FXH, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
When you look at individual holdings, Regeneron Pharmaceuticals, Inc. (REGN) accounts for about 2.92% of the fund's total assets, followed by Biogen Inc. (BIIB) and Insmed Incorporated (INSM).
FXH's top 10 holdings account for about 25.63% of its total assets under management.
Performance and Risk
So far this year, FXH return is roughly 0.73%, and is up roughly 7.66% in the last one year (as of 02/17/2026). During this past 52-week period, the fund has traded between $93.63 and $119.31.
The fund has a beta of 0.79 and standard deviation of 14.93% for the trailing three-year period, which makes FXH a medium risk choice in this particular space. With about 77 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Health Care AlphaDEX ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the State Street Health Care Select Sector SPDR ETF ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $17.44 billion in assets, State Street Health Care Select Sector SPDR ETF ETF has $41.71 billion. VHT has an expense ratio of 0.09% and XLV 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 Health Care 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 Health Care AlphaDEX ETF (FXH): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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