FXO: FIRST TRUST FINANCIALS ALPHADEX FUND
Understanding the First Trust Financials AlphaDex Fund (FXO)
The First Trust Financials AlphaDex Fund (ticker: FXO) is an ETF designed to provide exposure to the financial sector. It focuses on various companies within the financial industry, such as insurance and asset management firms.
What this ETF is trying to do
FXO seeks to track the performance of companies in the financial services industry. Based on its top holdings, the fund invests in a variety of businesses, including investment groups and insurance providers. Because it holds many different companies, it spreads its investment across the financial sector.
Top Holdings
The following are some of the largest companies held by this fund (note that this is a partial list):
• T. Rowe Price Group Inc (1.80%)
• The Hanover Insurance Group Inc (1.76%)
• Affiliated Managers Group Inc (1.74%)
• Cincinnati Financial Corp (1.68%)
• Allstate Corp (1.64%)
• Bank OZK (1.62%)
• First American Financial Corp (1.62%)
• SEI Investments Co (1.59%)
• Everest Group Ltd (1.56%)
• AGNC Investment Corp (1.55%)
*Holdings can change over time.*
What the numbers show
When looking at how this fund has performed, it is important to distinguish between price return (the change in the share price) and total return (which includes the value of distributions).
• Year-to-Date (YTD): The price return is approximately 2.20%, while the total return is approximately 4.02%.
• One-Year: The price return was approximately 3.96%, while the total return was approximately 6.43%.
• Three-Year: The price return was approximately 65.45%, while the total return was approximately 76.77%.
An estimated price from roughly one year ago was $59.33, compared to the current price of $61.68.
Income and distribution explanation
FXO provides cash distributions to investors. The distribution yield is approximately 2.27%. This number represents the cash paid out relative to the current share price.
The fund usually pays these distributions on a quarterly basis. Over the last 12 months, there were 4 payouts. It is important to remember that a distribution yield tells you about the cash paid out, but it does not represent the total return of the investment.
NAV erosion explanation
"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the fund's underlying assets). The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.
However, the fund's erosion-risk score is 94, which is labeled as "Stable / sideways" with a "good" severity rating. There is no severe erosion-risk flag for this ETF.
Pros
• Strong Historical Returns: The fund has shown significant total returns over the three-year period.
• Stable Risk Profile: The erosion-risk score suggests a stable price trend.
• Income Generation: The fund provides regular quarterly distributions.
Cons
• Sector Concentration: Because this ETF focuses on financials, it may be more affected by changes in that specific industry.
• Partial Data: The list of holdings provided is only a partial view of the total 107 holdings.
Beginner takeaway
FXO is an ETF that focuses on the financial sector. It has historically provided both share-price growth and cash distributions. When researching, remember that the price return only shows how the share price moved, while the total return shows a more complete picture by including distributions.
Top Holdings
Structured portfolio holdings supplied by the ETF data provider. These figures are not generated by the AI article.
| # | Holding | Ticker | Weight |
|---|---|---|---|
| 1 | T. ROWE PRICE GROUP INC | TROW | 1.80% |
| 2 | THE HANOVER INSURANCE GROUP INC | THG | 1.76% |
| 3 | AFFILIATED MANAGERS GROUP INC | AMG | 1.74% |
| 4 | CINCINNATI FINANCIAL CORP | CINF | 1.68% |
| 5 | ALLSTATE CORP | ALL | 1.64% |
| 6 | BANK OZK | OZK | 1.62% |
| 7 | FIRST AMERICAN FINANCIAL CORP | FAF | 1.62% |
| 8 | SEI INVESTMENTS CO | SEIC | 1.59% |
| 9 | EVEREST GROUP LTD | EG | 1.56% |
| 10 | AGNC INVESTMENT CORP | AGNC | 1.55% |