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Launched on 05/08/2007, the First Trust Consumer Staples AlphaDEX ETF (FXG) is a passively managed exchange traded fund designed to provide a broad exposure to the Consumer Staples – Broad segment of the equity market.
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. Consumer Staples – 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 $664.66 million, making it one of the average sized ETFs attempting to match the performance of the Consumer Staples – Broad segment of the equity market. FXG seeks to match the performance of the StrataQuant Consumer Staples Index before fees and expenses.
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.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.
Annual operating expenses for this ETF are 0.64%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.29%.
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.
This ETF has heaviest allocation in the Consumer Staples sector–about 86.50% of the portfolio. Healthcare and Materials round out the top three.
Looking at individual holdings, Performance Food Group Company (PFGC) accounts for about 4.50% of total assets, followed by Mckesson Corporation (MCK) and Walgreens Boots Alliance, Inc. (WBA).
The top 10 holdings account for about 40.03% of total assets under management.
Performance and Risk
So far this year, FXG has gained about 3.84%, and it’s up approximately 8.82% in the last one year (as of 11/21/2022). During this past 52-week period, the fund has traded between $56.74 and $67.92.
The ETF has a beta of 0.68 and standard deviation of 19.66% 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 holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FXG is an outstanding option for investors seeking exposure to the Consumer Staples ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
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 $6.68 billion in assets, Consumer Staples Select Sector SPDR ETF has $16.84 billion. VDC has an expense ratio of 0.10% and XLP charges 0.10%.
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 Consumer Staples AlphaDEX ETF (FXG): ETF Research Reports
McKesson Corporation (MCK): Free Stock Analysis Report
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
Walgreens Boots Alliance, Inc. (WBA): Free Stock Analysis Report
Performance Food Group Company (PFGC): Free Stock Analysis Report
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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