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

Designed to provide broad exposure to the Consumer Staples ETFs category of the market, the First Trust Consumer Staples AlphaDEX ETF (FXG) is a smart beta exchange traded fund launched on 05/08/2007.What Are Smart Beta ETFs?Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.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.However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.Fund Sponsor & IndexThe fund is managed by First Trust Advisors, and has been able to amass over $410.23 million, which makes it one of the average sized ETFs in the Consumer Staples ETFs. This particular fund 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.Cost & Other ExpensesWhen 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.Operating expenses on an annual basis are 0.63% for this ETF, which makes it the most expensive product in the space.The fund has a 12-month trailing dividend yield of 1.59%.Sector Exposure and Top HoldingsIt 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.Representing 90% of the portfolio, the fund has heaviest allocation to the Consumer Staples sector; Healthcare and Materials round out the top three.Looking at individual holdings, Pilgrim's Pride Corporation (PPC) accounts for about 4.91% of total assets, followed by Molson Coors Beverage Company (TAP) and Freshpet, Inc. (FRPT).FXG's top 10 holdings account for about 39.6% of its total assets under management.Performance and RiskThe ETF has added about 7.68% and is up roughly 18.97% so far this year and in the past one year (as of 10/29/2024), respectively. FXG has traded between $58 and $69.07 during this last 52-week period.The ETF has a beta of 0.66 and standard deviation of 13.48% 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.AlternativesFirst Trust Consumer Staples AlphaDEX ETF is a reasonable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. However, there are other ETFs in the space which investors could 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 $7.13 billion in assets, Consumer Staples Select Sector SPDR ETF has $16.98 billion. VDC has an expense ratio of 0.10% and XLP charges 0.09%.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 LineTo 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 key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>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 Consumer Staples AlphaDEX ETF (FXG): ETF Research Reports Molson Coors Beverage Company (TAP): Free Stock Analysis Report Freshpet, Inc. (FRPT): Free Stock Analysis Report Pilgrim's Pride Corporation (PPC): Free Stock Analysis Report Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports Vanguard Consumer Staples ETF (VDC): ETF Research ReportsTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks