The First Trust Utilities AlphaDEX ETF (FXU) was launched on 05/08/2007, and is a passively managed exchange traded fund designed to offer broad exposure to the Utilities - Broad segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $383.71 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. FXU seeks to match the performance of the StrataQuant Utilities Index before fees and expenses.
The StrataQuant Utilities 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
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.63%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.81%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 95.10% of the portfolio.
Looking at individual holdings, Ugi Corporation (UGI) accounts for about 4.69% of total assets, followed by Exelon Corporation (EXC) and Consolidated Edison, Inc. (ED).
The top 10 holdings account for about 40.45% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Utilities AlphaDEX ETF has gained about 7.86% so far, and was up about 31.19% over the last 12 months (as of 03/25/2025). FXU has traded between $30.78 and $41.14 in this past 52-week period.
The ETF has a beta of 0.70 and standard deviation of 17.60% 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 Utilities 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. FXU, then, is not the best option for investors seeking exposure to the Utilities/Infrastructure ETFs segment of the market. Instead, there are better ETFs in the space to consider.
Vanguard Utilities ETF (VPU) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $6.73 billion in assets, Utilities Select Sector SPDR ETF has $17.55 billion. VPU has an expense ratio of 0.09% and XLU 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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Get it free >>First Trust Utilities AlphaDEX ETF (FXU): ETF Research Reports
Exelon Corporation (EXC) : Free Stock Analysis Report
Consolidated Edison Inc (ED) : Free Stock Analysis Report
UGI Corporation (UGI) : Free Stock Analysis Report
Utilities Select Sector SPDR ETF (XLU): ETF Research Reports
Vanguard Utilities ETF (VPU): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
