Should You Invest in the First Trust Technology AlphaDEX ETF (FXL)?

Looking for broad exposure to the Technology - Broad segment of the equity market? You should consider the First Trust Technology AlphaDEX ETF (FXL), a passively managed exchange traded fund launched on May 8, 2007.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - 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 $1.37 billion, making it one of the larger ETFs attempting to match the performance of the Technology - Broad segment of the equity market. FXL seeks to match the performance of the StrataQuant Technology Index before fees and expenses.

The StrataQuant Technology 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

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.6%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.03%.

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 Information Technology sector -- about 80.2% of the portfolio. Industrials and Telecom round out the top three.

Looking at individual holdings, Palantir Technologies Inc. (class A) (PLTR) accounts for about 2.28% of total assets, followed by Reddit, Inc. (class A) (RDDT) and Amphenol Corporation (APH).

The top 10 holdings account for about 18.42% of total assets under management.

Performance and Risk

So far this year, FXL has added roughly 7.95%, and is up roughly 18.88% in the last one year (as of 09/01/2025). During this past 52-week period, the fund has traded between $115.28 and $162.699.

Story ContinuesThe ETF has a beta of 1.16 and standard deviation of 24.15% for the trailing three-year period, making it a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Technology AlphaDEX ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FXL is an outstanding option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

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Learn More Powered by Money.com - Yahoo may earn commission from the links above. Technology Select Sector SPDR ETF (XLK) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $83.99 billion in assets, Vanguard Information Technology ETF has $99.65 billion. XLK has an expense ratio of 0.08%, and VGT charges 0.09%.

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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First Trust Technology AlphaDEX ETF (FXL): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

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