Is First Trust Consumer Staples AlphaDEX ETF (FXG) a Strong ETF Right Now?

A smart beta exchange traded fund, the First Trust Consumer Staples AlphaDEX ETF (FXG) debuted on 05/08/2007, and offers broad exposure to the Consumer Staples ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

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

The fund is managed by First Trust Advisors. FXG has been able to amass assets over $296.81 million, making it one of the average sized ETFs in the Consumer Staples ETFs. Before fees and expenses, FXG seeks to match the performance of the StrataQuant Consumer Staples Index.

The StrataQuant Consumer Staples 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 one of the most expensive products in the space, this ETF has annual operating expenses of 0.62%.

The fund has a 12-month trailing dividend yield of 2.24%.

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.

For FXG, it has heaviest allocation in the Consumer Staples sector --about 86.3% of the portfolio --while Healthcare and Materials round out the top three.

Looking at individual holdings, Casey's General Stores, Inc. (CASY) accounts for about 4.9% of total assets, followed by Mckesson Corporation (MCK) and Cencora Inc. (COR).

Its top 10 holdings account for approximately 41.2% of FXG's total assets under management.

Performance and Risk

The ETF has added about 0.78% so far this year and is up about 1.57% in the last one year (as of 07/09/2025). In the past 52-week period, it has traded between $61.21 and $70.06

The ETF has a beta of 0.57 and standard deviation of 12.84% for the trailing three-year period, making it a medium risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers .

Alternatives

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

Vanguard Consumer Staples ETF (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $7.63 billion in assets, Consumer Staples Select Sector SPDR ETF has $15.97 billion. VDC has an expense ratio of 0.09% and XLP 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 Staples ETFs

Bottom Line

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

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