Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Consumer Staples AlphaDEX ETF (FXG) provides investors broad exposure to the Consumer Staples ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FXG has been able to amass assets over $228.21 million, making it one of the average sized ETFs in the Consumer Staples ETFs. 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.
Cost & Other Expenses
When 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 FXG, making it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.38%.
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.
Representing 91.1% of the portfolio, the fund has heaviest allocation to the Consumer Staples sector.
Taking into account individual holdings, Casey's General Stores, Inc. (CASY) accounts for about 5.34% of the fund's total assets, followed by Coca-cola Consolidated, Inc. (COKE) and Smithfield Foods, Inc. (SFD).
The top 10 holdings account for about 40.06% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Consumer Staples AlphaDEX ETF has added about 7.14% so far, and is up about 4.61% over the last 12 months (as of 07/22/2026). FXG has traded between $59.70 $69.38 in this past 52-week period.
The fund has a beta of 0.49 and standard deviation of 12.81% for the trailing three-year period, which makes FXG a medium risk choice in this particular space. With about 41 holdings, it has more concentrated exposure than peers .
Alternatives
First 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 Index Fund ETF Shares (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the State Street Consumer Staples Select Sector SPDR ETF (XLP) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples Index Fund ETF Shares has $7.87 billion in assets, State Street Consumer Staples Select Sector SPDR ETF has $14.24 billion. VDC has an expense ratio of 0.09% and XLP changes 0.08%.
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 Line
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First Trust Consumer Staples AlphaDEX ETF (FXG): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).