"FEX uses First Trust's AlphaDEX methodology to select approximately 200 stocks from the S&P 500 based on growth and value factors. Unlike market-cap weighted indexes concentrating holdings in mega-cap tech stocks, FEX spreads exposure evenly. No single holding exceeds 0.75% of the portfolio, with top positions including Micron Technology (NASDAQ:MU), Rocket Lab USA (NASDAQ:RKLB), and Illumina (NASDAQ:ILMN). This creates sector balance: Industrials at 16.1%, Financials at 16%, and Information Technology at 14.5%, compared to the S&P 500's 34% tech concentration."
"FEX delivered 12.3% annualized returns over the past decade, trailing the S&P 500's 12.8% despite its 0.57% expense ratio being six times higher than SPDR S&P 500 ETF Trust (NYSEARCA:SPY)'s 0.09%. Over 10 years, this translates to underperformance of roughly 17 percentage points after accounting for additional costs. While FEX outpaced the market in early 2026 by 1.5 percentage points year-to-date, it lagged by nearly 8 percentage points over the trailing five years."
FEX applies AlphaDEX factor screening to select roughly 200 S&P 500 stocks using growth and value criteria. Holdings are equally weighted with no position exceeding 0.75%, producing sector balance (Industrials 16.1%, Financials 16%, Information Technology 14.5%) versus the S&P 500's heavy tech concentration. The fund rebalances aggressively each quarter, producing an 88% annual turnover compared with traditional index funds. Over the past decade FEX annualized at 12.3%, trailing the S&P 500's 12.8% while charging a 0.57% expense ratio, roughly six times SPY's 0.09%. Higher fees and dividend volatility reduce retirement income predictability; on a $100,000 investment FEX costs $570 annually versus $90 for a basic S&P 500 fund, eroding long-term returns for income-focused investors.
Read at 24/7 Wall St.
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