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Should You Invest in the First Trust Consumer Discretionary AlphaDEX ETF (FXD)?
ZACKSยท2025-08-04 11:21

Core Viewpoint - The First Trust Consumer Discretionary AlphaDEX ETF (FXD) is a passively managed ETF that provides broad exposure to the Consumer Discretionary - Broad segment of the equity market, appealing to both retail and institutional investors due to its low costs and tax efficiency [1][3]. Group 1: ETF Overview - FXD was launched on May 8, 2007, and has accumulated over $315.05 million in assets, making it one of the larger ETFs in its category [3]. - The ETF aims to match the performance of the StrataQuant Consumer Discretionary Index, utilizing the AlphaDEX stock selection methodology to choose stocks from the Russell 1000 Index [3]. Group 2: Costs and Performance - The annual operating expenses for FXD are 0.61%, which is competitive within its peer group, and it has a 12-month trailing dividend yield of 1.13% [4]. - As of August 4, 2025, FXD has experienced a year-to-date loss of approximately 0.88% but has gained about 8.32% over the past year [7]. Group 3: Sector Exposure and Holdings - The ETF has a significant allocation of about 75.7% in the Consumer Discretionary sector, with Telecom and Industrials also represented [5]. - Dillard's, Inc. (class A) constitutes about 1.53% of total assets, with the top 10 holdings making up approximately 15.03% of total assets under management [6]. Group 4: Alternatives and Market Position - FXD holds a Zacks ETF Rank of 4 (Sell), indicating it may not be the best choice for investors seeking exposure to the Consumer Discretionary segment [8]. - Alternative ETFs such as the Vanguard Consumer Discretionary ETF (VCR) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have significantly larger asset bases of $6.00 billion and $21.68 billion, respectively, and lower expense ratios of 0.09% and 0.08% [10].