Looking for broad exposure to the Materials - Broad segment of the equity market? You should consider the First Trust Materials AlphaDEX ETF (FXZ), a passively managed exchange traded fund launched on May 8, 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. 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 $390.27 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.64%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.29%.
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 Materials sector -- about 84.4% of the portfolio, followed by Industrials.
Looking at individual holdings, Cf Industries Holdings, Inc. (CF) accounts for about 5.29% of total assets, followed by Newmont Corporation (NEM) and Steel Dynamics, Inc. (STLD).The top 10 holdings account for about 43.73% of total assets under management.
Performance and Risk
So far this year, FXZ has gained about 30.27%, and is up about 47.56% in the last one year (as of 08/11/2026). During this past 52-week period, the fund has traded between $57.87 and $84.83.
The ETF has a beta of 1.04 and standard deviation of 21.82% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Materials AlphaDEX ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. FXZ, then, is not a suitable option for investors seeking exposure to the Materials ETFs segment of the market. Instead, there are better ETFs in the space to consider.
FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index and the State Street Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $7.09 billion in assets, State Street Materials Select Sector SPDR ETF has $8.69 billion. GUNR has an expense ratio of 0.46%, and XLB charges 0.08%.
Bottom Line
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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First Trust Materials AlphaDEX ETF (FXZ): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).