Analyzing the Strength of the First Trust Energy ETF FXN
Understanding the First Trust Energy AlphaDEX ETF
The First Trust Energy AlphaDEX ETF (FXN) is a unique exchange-traded fund crafted to offer extensive exposure to the energy sector. Launched in 2007, this smart beta ETF operates with a vision to outperform typical market returns by focusing on stock selection based on rigorous screening methodologies.
What Sets Smart Beta ETFs Apart?
In a landscape predominantly occupied by market-cap weighted index funds, smart beta ETFs provide an alternative approach. While traditional ETFs track indexes based purely on company size, smart beta strategies employ various fundamental characteristics—like valuation and momentum—aiming to enhance returns and reduce risks.
These strategies attract investors who believe in the potential for superior performance through selective stock picking, diverging from the standard expectation of market efficiency represented by traditional ETFs.
Fund Management and Index Tracking
FXN is managed by First Trust Advisors and has successfully gathered more than $478 million in assets. It aims to mirror the performance of the StrataQuant Energy Index, a modified equal-dollar weighted index that selectively identifies stocks from the Russell 1000 Index. This selection is designed to appeal to investors looking for potential alpha over conventional passive strategies.
Expense Considerations
When assessing ETFs, the expense ratio is crucial. FXN's ongoing expenses sit at 0.62%, which aligns it with many of its peers within the energy segment. Additionally, this ETF boasts a 12-month trailing dividend yield of 2.02%, making it attractive for income-seeking investors.
Sector Breakdown and Leading Holdings
Transparency characterizes ETFs, and FXN is no exception; it reveals its holdings daily, allowing investors to gauge its diversification and identify risk factors. This ETF predominantly focuses on the energy sector, with an impressive 99.10% of its portfolio allocated there.
Among its top holdings, Valero Energy Corporation (VLO) represents approximately 4.23% of total assets, along with notable contributors like Matador Resources Company (MTDR) and Nov Inc. (NOV). Together, these leading stocks form about 39.22% of FXN's assets.
Evaluating Performance and Risk
FXN has recorded a modest gain of about 1.68% this year, but it has encountered challenges recently, declining approximately 4.04% over the past year. With trading fluctuating between $15.73 and $19.35 during the last 52 weeks, investors should assess their risk tolerance, especially considering the ETF's high beta of 1.61 and a standard deviation of 28.88% over the last three years.
Exploring Alternative ETFs
For those considering options beyond FXN, other ETFs in the energy sector could be appealing. The Vanguard Energy ETF (VDE) tracks the MSCI US Investable Market Energy 25/50 Index, while the Energy Select Sector SPDR ETF (XLE) follows the Energy Select Sector Index. Both alternatives have significant assets under management, with VDE holding $8.22 billion and XLE managing $36.48 billion. Notably, VDE charges an expense ratio of 0.10%, while XLE expenses sit at 0.09%.
Investors keen on minimizing costs and risks might opt for traditional market-cap-weighted ETFs that aim for robust returns in the energy sector.
Frequently Asked Questions
What is the First Trust Energy AlphaDEX ETF?
The First Trust Energy AlphaDEX ETF (FXN) is a smart beta ETF designed to provide exposure to the energy sector by selecting stocks based on specific characteristics.
How does FXN's expense ratio compare to others?
FXN has an expense ratio of 0.62%, which is competitive within the energy ETF space.
What is the focus of FXN?
FXN focuses primarily on the energy sector, allocating 99.10% of its portfolio to energy-related stocks.
What are some of FXN's top holdings?
Its top holdings include Valero Energy Corporation (VLO), Matador Resources Company (MTDR), and Nov Inc. (NOV).
How has FXN performed recently?
This ETF has gained about 1.68% this year, but there has been a decline of approximately 4.04% over the last year.
About Investors Hangout
Investors Hangout is a leading online stock forum for financial discussion and learning, offering a wide range of free tools and resources. It draws in traders of all levels, who exchange market knowledge, investigate trading tactics, and keep an eye on industry developments in real time. Featuring financial articles, stock message boards, quotes, charts, company profiles, and live news updates. Through cooperative learning and a wealth of informational resources, it helps users from novices creating their first portfolios to experts honing their techniques. Join Investors Hangout today: https://investorshangout.com/
Related Articles
- Stellantis Halts Production of Jeep Wrangler and Grand Cherokee
- Strengthening China-Africa Partnerships for a Shared Future
- GEEKOM Unveils Latest Mini PCs at the Exciting IFA 2024
- Kayne Anderson Energy Infrastructure Fund Updates Key Financials
- Strider Technologies Expands Global Presence with Tokyo Office
- Aon's Remarkable Growth: A Decade of Outstanding Returns
- 20 Years of Investment: The Growth of Charles Schwab SCHW
- Discover How $100 in HealthEquity Could Grow Exponentially
- Investing in Centene: A 15-Year Journey of Growth
- T-Mobile US: A Decade of Remarkable Investment Growth
- Investing in Ross Stores: A 15-Year Journey of Gains
- Exro Technologies Inc. Plans Public Offering Up to $30 Million
- Serina Therapeutics to Showcase Innovation at Upcoming Conference
- Scentre Group Reveals Early Tender Offer Results for Notes
- Analyzing the Nikkei: Is a Double Dip on the Horizon?
- How the Rating Boost Will Benefit Build-A-Bear Investors
- American Eagle Outfitters: Growth Strategies and Market Strength
- Corcept Therapeutics: Stock Surge and Future Prospects
- Fortive Corp Plans Strategic Spin-Off of Precision Technologies
- Evaluating the Future of Insulet Corp. and PODD Stock
- Exploring the Potential of First Trust Value Line Dividend ETF
- Exploring the Invesco Russell 1000 Dynamic Multifactor ETF
- Exploring the Strength of First Trust Mid Cap Growth ETF
- Eli Lilly: Analyzing Its Momentum Stock Potential
- Join the Class Action Against Stellantis N.V. for Securities Fraud
Recent Articles
- Avanti Helium Completes Financing with Final Tranche Sale
- Understanding PCB Bancorp's Strong Buy Upgrade and Future Outlook
- GitLab Inc. Exceeds Earnings Expectations in Recent Quarter
- Kratos Defense: A Momentum Stock Worth Your Attention
- Nvidia Faces DOJ Scrutiny Amid Market Turmoil
- Couchbase Reports Strong Q2 Performance and Future Growth
- AIGrid Supercomputing Launch on TBAA Exchange Ignites Change
- Rising Copper Demand Sparks Global Theft and Violence Issues
- Ripple President Enthusiastically Supports XRPL Advancements
- Haivision and Airbus Team Up for Cutting-Edge Communication Tech
- Sprinklr Inc. Reports Strong Revenue Growth Amid Earnings Miss
- Lixiang Education Faces Nasdaq Listing Compliance Challenges
- VirnetX's NYSE Compliance Plan and Future Strategies Overview
- Universal Technical Institute Expands EV Training with BMW
- MediaAlpha and Insurify Renew Collaboration for Future Growth
- Trevi Therapeutics' Phase 2a CANAL Trial Data Presentation Details
- Chipotle Mexican Grill to Discuss Third Quarter Financials
- Intel's Contract Chip Manufacturing to Generate Revenue by 2027
- Headwall Investments Boosts Portfolio with Houston Acquisition
- Fleming's Unveils New Flagship Restaurant in Tampa Area
- Explore the Transformative Power of Nine Star Ki Today
- Impact of T+1 Settlement on Global Securities Market Participants
- Third Annual Chicago Drives Electric Event Details Revealed
- 2024 Drive Electric Awards Honoring Leaders in EV Movement
- Nvidia's Market Impact: Analyzing Big Tech's Influence