Is First Trust Industrials/Producer Durables AlphaDEX ETF (FXR) a Strong ETF Right Now?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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.

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.

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.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

FXR is managed by First Trust Advisors, and this fund has amassed over $731.36 million, which makes it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, this particular fund seeks to match the performance of the StrataQuant Industrials Index.

The StrataQuant Industrials 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

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 FXR are 0.60%, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 0.65%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

For FXR, it has heaviest allocation in the Industrials sector --about 69.6% of the portfolio --while Materials and Financials round out the top three.

Taking into account individual holdings, Rocket Lab Corporation (RKLB) accounts for about 1.46% of the fund's total assets, followed by Comfort Systems Usa, Inc. (FIX) and Caterpillar Inc. (CAT).

FXR's top 10 holdings account for about 12.89% of its total assets under management.

Performance and Risk

Year-to-date, the First Trust Industrials/Producer Durables AlphaDEX ETF has added about 11.31% so far, and was up about 15.16% over the last 12 months (as of 07/23/2026). FXR has traded between $73.09 $91.51 in this past 52-week period.

FXR has a beta of 1.07 and standard deviation of 19.28% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 146 holdings, it effectively diversifies company-specific risk .

Alternatives

First Trust Industrials/Producer Durables AlphaDEX ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

First Trust RBA American Industrial Renaissance ETF (AIRR) tracks Richard Bernstein Advisors American Industrial Renaissance Index and the State Street Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. First Trust RBA American Industrial Renaissance ETF has $12.6 billion in assets, State Street Industrial Select Sector SPDR ETF has $32.84 billion. AIRR has an expense ratio of 0.69% and XLI 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 Industrials ETFs

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

.

Boost Your Portfolio with Our Top ETF Insights

Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.

Don’t miss out on this valuable resource. It’s 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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research