What Is the FXU ETF? A Complete Guide to Returns, Expense Ratio, Holdings, and Alternative ETFs
A smart beta ETF that uses the AlphaDEX quantitative strategy to select high-quality U.S. utilities stocks and concentrate its investments in them.
SubscribeWhat Is This ETF?
The fund tracks the StrataQuant Utilities Index and selects utilities stocks from the Russell 1000 Index that show strong growth and value characteristics. It evaluates and weights stocks using a variety of quantitative metrics, including sales growth and price-to-cash-flow.
It suits investors who, rather than simply tracking an index, want to concentrate on stocks within the utilities sector that are expected to perform better.
First Trust launched the ETF in 2007, and it is passively managed, tracking an index.
How Does It Invest?
| Item | Details |
|---|---|
| Tracked Index | StrataQuant Utilities Index |
| Management Style | Passive (smart beta) |
| Stock Selection | AlphaDEX quantitative methodology |
| Dividend Frequency | Quarterly |
| Expense Ratio | 0.61% |
The fund ranks stocks by combining value factors (book value, cash flow) with growth factors (sales growth, price appreciation). By assigning higher weights to top-ranked stocks, it seeks the potential for returns above the benchmark.
- Moves away from market-cap weighting
- A refined quantitative strategy combining growth and value factors
Size and Costs
Assets under management (AUM) stand at $760.3M, and the expense ratio is 0.61% per year.
Because of the costs of building and maintaining a proprietary index, fees are somewhat higher than those of standard index ETFs such as XLU and VPU, but the structure offers the potential benefit of active stock selection.
Performance and Trends
1-Year Price Performance
Dividend & Yield
52-Week Price RangeWhile the utilities sector as a whole reacts sensitively to the interest rate environment, FXU has built its portfolio mainly around stocks with relatively strong financial health and growth, and has demonstrated resilience in down markets.
Money tends to flow in when recession fears grow or when demand rises for assets offering stable dividends and defensive characteristics, and the fund has drawn steady interest from investors who favor smart beta strategies.
Strengths and Weaknesses
The product adds the excess-return potential of a quantitative strategy to the stability of utilities, so investors need to weigh both costs and the consistency of the strategy.
💪 Key Strengths
⚠️ Points to Watch
Alternative ETFs and Related Products
The XLU, VPU, and FUTY shown in the table are representative low-cost utilities ETFs that use market-cap weighting, so their weighting methodology differs from that of FXU. If you want more active management, you could consider UTES, and if you want to focus on dividend growth, pairing the fund with a broad dividend growth ETF such as DGRO is also a sound strategy.
Peer Comparison ETFs| Ticker | Name | Price | Change | AUM | Total Expense Ratio | Dividend Yield | 1Y |
|---|---|---|---|---|---|---|---|
 XLU | State Street Utilities Select Sector SPDR ETF | $42.49 | -0.8% | $23.9B | 0.08% | 2.85% | -5.7% |
 VPU | Vanguard Utilities ETF | $183.81 | -0.8% | $8.1B | 0.09% | 2.83% | -6.0% |
 FUTY | Fidelity MSCI Utilities Index ETF | $54.84 | -0.9% | $2.0B | 0.08% | 2.79% | -5.9% |
 IDU | iShares U.S. Utilities ETF | $108.59 | -1.1% | $1.4B | 0.37% | 2.37% | -4.2% |
 UTES | Virtus Reaves Utilities ETF | $75.66 | -0.7% | $1.2B | 0.49% | 1.61% | -10.3% |
Top Holdings| Ticker | Name | Weight | Price | Change | Market Cap | P/E | Dividend Yield |
|---|---|---|---|---|---|---|---|
 NFG | National Fuel Gas Co | 0.05% | $80.21 | -1.7% | $7.6B | 11.2 | 2.71% |
 UGI | UGI Corp | 0.04% | $38.44 | -2.1% | $8.2B | 12.8 | 3.9% |
| PCG | PG&E Corp | 0.04% | $13.15 | +1.5% | $29.0B | 9.8 | 1.48% |
 PNW | Pinnacle West Capital Corp | 0.04% | $104.87 | -1.4% | $12.7B | 20.1 | 3.52% |
 AES | AES Corp | 0.04% | $14.98 | -0.3% | $10.7B | 5.6 | 4.74% |
 ES | Eversource Energy | 0.08% | $66.90 | -1.3% | $25.2B | 17.3 | 4.68% |
 EIX | Edison International | 0.04% | $58.83 | +1.1% | $22.6B | 6.1 | 5.93% |
| ED | Consolidated Edison Inc | 0.04% | $114.15 | -0.8% | $42.1B | 18.8 | 3.13% |
| EXC | Exelon Corp | 0.04% | $44.77 | +0.2% | $46.2B | 16.4 | 3.75% |
Investor Checkpoints
The FXU ETF is built on the stability that is characteristic of the utilities sector, and it is an investment tool suited to strategic investors who want additional returns through a refined quantitative algorithm.
| Checkpoint | What to Check | Current Status |
|---|---|---|
| 💵 Expense Ratio | Confirm that the cost level is reasonable relative to the AlphaDEX strategy | Maintained |
| 📊 Strategy Consistency | Review the stock rotation cycle and performance under the quantitative algorithm | Consistent |
| 📉 Macro Environment | Impact of changes in interest rates and energy prices on utilities industry conditions | Needs monitoring |
Interest rate changes are a key variable that determines the performance of the entire utilities sector. Investors should also recognize that, by the nature of a quantitative strategy, performance can diverge from the benchmark index during certain periods.
It is a suitable option for savvy investors who want stable dividend income together with market-beating returns from a quantitative strategy. It works well as a strategic asset for strengthening a portfolio's defensive profile.
SubscribeDisclaimer: This content is for informational purposes only and does not constitute investment advice. All investment responsibility lies with the investor.
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