Do you need to invest in the First Trust Utilities AlphaDEX ETF (FXU)?

If you are interested in a broad exposure to Utilities – a broad segment of the stock market, look no further than the First Trust Utilities AlphaDEX ETF (FXU), a passively managed exchange-traded fund launched on 05/08/2007.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low cost, transparency, flexibility and fiscal efficiency; they are also excellent vehicles for long-term investors.

Sectoral ETFs are also convenient funds, offering many ways to obtain low risk and diversified exposure to a wide group of companies in certain sectors. Utilities – Broad is one of the 16 broad sectors of Zacks in the Zacks Industry classification. He is currently in 7th place, which puts him in the top 44%.

Index details

The fund is sponsored by First Trust Advisors. It has amassed assets of over $ 345.10 million, making it one of the medium-sized ETFs that tries to match the performance of utilities – a broad segment of the stock market. FXU seeks to equalize the performance of the StrataQuant Utilities index before fees and charges.

The StrataQuant Utilities Index is a modified equity dollar index designed by AMEX to objectively identify and select shares in the Russell 1000 index that can generate positive alpha from traditional passive style indices using the AlphaDEX screening methodology.


Investors should also pay attention to the cost ratio of the ETF. Products with a lower price will give better results than those with a higher price, if we assume that all other indicators remain the same.

The annual operating cost of this ETF is 0.64%, making it the most expensive product in the space.

It has a 12-month dividend yield of 2.36%.

Sectoral exposition and leading holdings

It is important to delve into the assets of the ETF before investing, despite the many advantages of these types of funds, such as diversified exposure, which minimizes the risk of single shares. And most ETFs are very transparent products that reveal their assets on a daily basis.

This ETF has the largest distribution in the utilities sector – about 92.60% of the portfolio.

Considering the individual holdings, American Electric Power Company, Inc. (AEP) represents about 4.45% of total assets, followed by Exelon Corporation (EXC) and Pinnacle West Capital Corporation (PNW).

The first 10 farms represent about 39.92% of total assets under management.

Productivity and risk

The ETF has lost about -6.73% and has decreased by about -0.32% so far this year and in the last one year (as of June 20, 2022), respectively. FXU traded between $ 29.53 and $ 35.25 in the last 52 weeks.

The ETF has a beta of 0.53 and a standard deviation of 24.37% over the last three years, making it a medium risk choice in space. With about 41 farms, it has a more concentrated exposure than its competitors.


The First Trust Utilities AlphaDEX ETF has a Zacks ETF rating of 3 (Hold), which is based on expected return on asset class, cost-effectiveness ratio, among other factors. Thus, FXU is a good option for those looking for exposure in the field of utilities / infrastructure ETFs in the market. Investors may also want to consider some other ETF options in the space.

Vanguard Utilities ETF (VPU) tracks the MSCI US Investable Market Utilities 25/50 Index and Utilities Select Sector SPDR ETF (XLU) tracks the Utilities Select Sector Index. Vanguard Utilities ETF has $ 5.25 billion in assets, Utilities Select Sector SPDR ETF has $ 14.71 billion. VPU has a cost ratio of 0.10% and XLU charges 0.10%.


To learn more about this product and other ETFs, browse for products that meet your investment goals and read articles on the latest developments in the ETF investment universe, please visit the Zacks ETF Center.

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