ETF Evaluator: First Trust Financials AlphaDEX® ETF () Follow This ETF

First Trust Financials AlphaDEX® ETF Overview

First Trust Financials AlphaDEX® ETF (FXO) is a passively managed Sector Equity Financial exchange-traded fund (ETF). First Trust launched the ETF in 2007.

The investment seeks investment results that correspond generally to the price and yield (before the fund's fees and expenses) of an equity index called the StrataQuant® Financials Index. The fund will invest at least 90% of its net assets (including investment borrowings) in the securities that comprise the index. The index is a modified equal-dollar weighted index to objectively identify and select stocks from the Russell 1000® Index in the financial services sector that may generate positive alpha relative to traditional passive-style indices through the use of the AlphaDEX® selection methodology.

About First Trust Financials AlphaDEX® ETF (FXO)

There are 7 members of the management team with an average tenure of 16.02 years: Daniel Lindquist (2007), Jon Erickson (2007), David McGarel (2007), Stan Ueland (2007), Chris Peterson (2016), Erik Russo (2020) and Roger Testin (2007). Management tenure is more important for actively managed ETFs than passive index ETFs.

The ETF has 2 primary benchmarks: Russell 1000 TR USD index with a weighting of 100% and StrataQuant Financials TR USD index with a weighting of 100%. First Trust Financials AlphaDEX® ETF has 107 securities in its portfolio. The top 10 holdings constitute 18.1% of the ETF’s assets. The ETF meets the SEC requirement of being classified as a diversified fund. The ETF is not considered to have an ESG focus with its investment selection and management.

First Trust Financials AlphaDEX® ETF is part of the Equity global asset class and is within the Sector Equity ETF group. First Trust Financials AlphaDEX® ETF has 3.1% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 96.8% There is 3.1% allocated to foreign stock, and 0.0% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 0.0% (0.0% domestic bond, 0.0% foreign bond and 0.0% convertible bond). First Trust Financials AlphaDEX® ETF has 0.0% of the portfolio in cash.

Assets Under Management

The fund has $1 billion in total assets, which is below the $2 billion average for the Financial category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.

FXO Performance and Fees

The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The First Trust Financials AlphaDEX® ETF expense ratio is above average compared to funds in the Financial category. First Trust Financials AlphaDEX® ETF has an expense ratio of 0.60%, which is 61% lower than its category average, making the fund expense ratio grade a D. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.

High portfolio turnover can translate to higher expenses and lower aftertax returns. First Trust Financials AlphaDEX® ETF has a portfolio turnover rate of 90%, which indicates that it holds its assets around / 0.0 years. By way of comparison, the average portfolio turnover is 27% for the Financial category.

Recently, in the month of July 2026, First Trust Financials AlphaDEX® ETF returned 5.3%, which earned it a grade of C, as the Financial category had an average return of 4.6%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all ETFs in that category.

First Trust Financials AlphaDEX® ETF has a trailing yield of 1.99%, which is below the 3.85% category average. The fund normally distributes its income quarterly and its capital gains annually.

It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.

First Trust Financials AlphaDEX® ETF Grades

Year to date, the ETF has returned 10.4%, 5.6 percentage points better than the category, which translates into a grade of B. The fund has returned 17.9% over the past year (grade of B), 19.4% over the past three years (grade of B) and 11.4% per year over the past five years (grade of B) and 13.2% per year over the past 10 years (grade of B).

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