Exploring the First Trust Health Care AlphaDEX ETF (FXH): A Smart Beta Fund in the Health Care Sector
The First Trust Health Care AlphaDEX ETF (FXH) is an exchange-traded fund (ETF) that debuted on May 8, 2007. This fund is designed to offer investors broad exposure to the Health Care sector of the market through a smart beta strategy.
Understanding the First Trust Health Care AlphaDEX ETF (FXH)
The FXH ETF employs the AlphaDEX indexing methodology, which is a rules-based, market capitalization-weighted index designed to provide superior returns by selecting stocks based on both growth and value factors. The index selects stocks based on three growth factors (recent price and earnings growth, as well as price momentum) and three value factors (book value to price, earnings to price, and sales to price ratios).
Performance of the First Trust Health Care AlphaDEX ETF (FXH)
Since its inception, the FXH ETF has demonstrated consistent performance. According to Yahoo Finance, as of October 2021, it has delivered an annualized return of approximately 11.5% over the past five years and 17.4% over the past ten years. These figures outperform the S&P 500 Health Care sector, which returned 10.1% and 15.3%, respectively, during the same periods.
Impact of the First Trust Health Care AlphaDEX ETF (FXH) on Individual Investors
For individual investors seeking exposure to the Health Care sector, the FXH ETF offers several advantages. Its smart beta strategy allows it to potentially outperform the market by focusing on stocks with strong growth and value characteristics. Additionally, its liquidity and daily trading make it an accessible investment option for those looking to allocate capital to the sector.
Impact of the First Trust Health Care AlphaDEX ETF (FXH) on the World
On a larger scale, the FXH ETF represents a growing trend in the ETF industry: the use of smart beta strategies to potentially enhance returns. By focusing on specific factors, such as growth and value, these funds aim to provide more targeted exposure to various sectors and asset classes. As more investors become interested in these strategies, it could lead to increased competition and innovation in the ETF market.
Conclusion
In conclusion, the First Trust Health Care AlphaDEX ETF (FXH) is an attractive investment option for those seeking exposure to the Health Care sector. Its smart beta strategy, consistent performance, and daily liquidity make it a compelling choice for both individual investors and institutional investors. Moreover, its potential to outperform the market through targeted stock selection could contribute to a broader trend of increased competition and innovation in the ETF industry.
- The FXH ETF is a smart beta exchange-traded fund launched on May 8, 2007.
- It employs the AlphaDEX indexing methodology, which selects stocks based on growth and value factors.
- The FXH ETF has delivered strong performance, outperforming the S&P 500 Health Care sector over the past five and ten years.
- For individual investors, the FXH ETF offers targeted exposure to the Health Care sector with the potential for enhanced returns.
- On a larger scale, the FXH ETF represents a growing trend in the ETF industry, with more investors turning to smart beta strategies for potentially superior returns.
