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If you're interested in broad exposure to the Materials - Broad segment of the equity market, look no further than the First Trust Materials AlphaDEX ETF (FXZ), a passively managed exchange traded fund launched on 05/08/2007.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $234.02 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. FXZ seeks to match the performance of the StrataQuant Materials Index before fees and expenses.
The StrataQuant Materials 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.61%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.49%.
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 Materials sector--about 91.20% of the portfolio.
Looking at individual holdings, Nucor Corporation (NUE) accounts for about 5.40% of total assets, followed by Steel Dynamics, Inc. (STLD) and Eastman Chemical Company (EMN).
The top 10 holdings account for about 45.43% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Materials AlphaDEX ETF has lost about -1.54% so far, and is down about -18.81% over the last 12 months (as of 03/24/2025). FXZ has traded between $54.79 and $72.04 in this past 52-week period.