Is it worth investing in First Trust AlphaDEX ETF (FXL)? – TradingView News

If you are interested in broad exposure to technology – a broad segment of the stock market – look no further than the First Trust Technology AlphaDEX ETF FXLpassively managed exchange-traded fund launched on May 8, 2007.

While passively managed ETFs are a great tool for long-term investors, they are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility and tax efficiency.

Investor-friendly sector ETFs provide many opportunities to gain low risk and diversified exposure to a wide range of companies in specific sectors. Technology – Broad is one of the 16 broad Zacks Industry Sectors. It currently ranks 11th, at a low of 31%.

Index details

The fund’s sponsor is First Trust Advisors. It has accumulated more than $1.34 billion in assets, making it one of the larger ETFs trying to match the performance of the broader equity market. FXL strives to match the performance of the StrataQuant Technology Index before fees and expenses.

The StrataQuant Technology Index is a modified equal-dollar-weighted index designed by AMEX to objectively identify and select stocks from the Russell 1000 Index that have the potential to generate positive alpha compared to traditional passive-style indexes 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 over the long term if all other factors remain constant.

The annual operating costs of this ETF are 0.62%, making it comparable to most similar products on the market.

Its trailing 12-month dividend yield is 0.42%.

Sector exposure and largest assets

It is important to delve into an ETF’s holdings before investing, despite the many advantages of this type of fund, such as diversified exposure that minimizes the risk of a single stock. Most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has the largest allocation to the information technology sector at approximately 84.20% of the portfolio. The top three are completed by the industrial and telecommunications sectors.

Looking at individual holdings, Vertiv Group Corp VRT accounts for approximately 2.66% of total assets, followed by Nvidia Corporation NVDA and Nutanix, Inc. (class A) NTNX.

The 10 largest holdings account for approximately 20.82% of total assets under management.

Performance and risk

The ETF added about 4.89%, and this year and last year (as of 17/06/2024) it has increased by about 18.32%, respectively. Over the last 52 weeks, FXL has traded between $104.07 and $138.57.

The ETF has a beta of 1.14 and a standard deviation of 24.67% for the trailing three-year period, making it a medium-risk pick in this space. Holding approximately 98 shares, it effectively diversifies company-specific risk.

Alternatives

First Trust Technology AlphaDEX ETF carries a Zacks ETF Rank #1 (Strong Buy), which is based on asset class expected return, expense ratio, and momentum, among other factors. For this reason, FXL is a great option for investors looking for exposure to the technology ETF market segment. There are other additional ETFs on the market that investors may also consider.

Technology Select SPDR ETF sector XLK tracks the Technology Select sector index and the Vanguard Information Technology ETF VGT tracks the MSCI US Investable Market Information Technology 25/50 index. The Technology Select Sector SPDR ETF has $71.05 billion in assets and the Vanguard Information Technology ETF has $73.71 billion. XLK has an expense ratio of 0.09% and VGT fee of 0.10%.

Bottom line

To learn more about this product and other ETFs, find products that match your investment goals, and read articles on the latest developments in the world of ETF investing, visit the Zacks ETF Center.

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