If you’re interested in broad exposure to the Consumer Staples – Broad segment of the equity market, look no further than the First Trust Consumer Staples AlphaDEX ETF (FXG – Free Report) , 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.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Staples – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $366.56 million, making it one of the average sized ETFs attempting to match the performance of the Consumer Staples – Broad segment of the equity market. 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.
Costs
Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.62%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.71%.
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.
This ETF has heaviest allocation in the Consumer Staples sector–about 93.40% of the portfolio.
Looking at individual holdings, Performance Food Group Company (PFGC – Free Report) accounts for about 4.70% of total assets, followed by Pilgrim’s Pride Corporation (PPC – Free Report) and Ingredion Incorporated (INGR – Free Report) .
The top 10 holdings account for about 40.96% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Consumer Staples AlphaDEX ETF has added about 2.69% so far, and it’s up approximately 2.69% over the last 12 months (as of 12/31/2024). FXG has traded between $61.56 and $70.06 in this past 52-week period.
The ETF has a beta of 0.67 and standard deviation of 13.32% for the trailing three-year period, making it a medium risk choice in the space. With about 41 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Consumer Staples AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FXG is a reasonable option for those seeking exposure to the Consumer Staples ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Consumer Staples ETF (VDC – Free Report) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP – Free Report) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $6.92 billion in assets, Consumer Staples Select Sector SPDR ETF has $16.25 billion. VDC has an expense ratio of 0.10% and XLP charges 0.09%.
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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