Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the First Trust Materials AlphaDEX ETF (FXZ), a passively managed exchange traded fund launched on 05/08/2007.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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 5, placing it in top 31%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $217.17 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
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 1.90%.
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 Materials sector--about 91.30% of the portfolio.
Looking at individual holdings, Newmarket Corporation (NEU) accounts for about 5.41% of total assets, followed by Steel Dynamics, Inc. (STLD) and Newmont Corporation (NEM).
The top 10 holdings account for about 47.14% of total assets under management.
Performance and Risk
So far this year, FXZ has lost about -2.88%, and is down about -19.58% in the last one year (as of 05/28/2025). During this past 52-week period, the fund has traded between $46.76 and $69.51.
The ETF has a beta of 1.15 and standard deviation of 24.45% for the trailing three-year period, making it a medium risk choice in the space. With about 37 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Materials 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, FXZ is a good option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
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 $4.76 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $4.71 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.
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
First Trust Materials AlphaDEX ETF (FXZ): ETF Research Reports Steel Dynamics, Inc. (STLD): Free Stock Analysis Report Newmont Corporation (NEM): Free Stock Analysis Report Materials Select Sector SPDR ETF (XLB): ETF Research Reports NewMarket Corporation (NEU): Free Stock Analysis Report FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
