Designed to provide broad exposure to the Consumer Discretionary - Broad segment of the equity market, the First Trust Consumer Discretionary AlphaDEX Fund (FXD) is a passively managed exchange traded fund launched on 05/08/2007.
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 are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Discretionary - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $317.46 M, making it one of the larger ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. FXD seeks to match the performance of the StrataQuant Consumer Discretionary Index before fees and expenses.
The StrataQuant Consumer Discretionary Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.63%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.09%.
Sector Exposure and Top Holdings
ETFs offer a 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.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 75.30% of the portfolio. Telecom and Industrials round out the top three.
Looking at individual holdings, Tribune Media Company (class A) (TRCO) accounts for about 2.15% of total assets, followed by Graham Holdings Company (GHC) and Newell Brands Inc. (NWL).
The top 10 holdings account for about 18.38% of total assets under management.
Performance and Risk
The ETF has lost about -12.36% so far this year and is down about -13.20% in the last one year (as of 12/27/2018). In that past 52-week period, it has traded between $34.86 and $45.22.
The ETF has a beta of 1 and standard deviation of 14.92% for the trailing three-year period, making it a medium risk choice in the space. With about 110 holdings, it effectively diversifies company-specific risk.
First Trust Consumer Discretionary AlphaDEX Fund 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, FXD is an outstanding option for investors seeking exposure to the Consumer Discretionary ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Vanguard Consumer Discretionary ETF (VCR) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR Fund (XLY) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $2.52 B in assets, Consumer Discretionary Select Sector SPDR Fund has $11.59 B. VCR has an expense ratio of 0.10% and XLY charges 0.13%.
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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FT-CONSUMR DIS (FXD): ETF Research Reports
Newell Brands Inc. (NWL) : Free Stock Analysis Report
Tribune Media Company (TRCO) : Free Stock Analysis Report
SPDR-CONS DISCR (XLY): ETF Research Reports
VIPERS-CONS DIS (VCR): ETF Research Reports
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