No stock accounts for more than 3.25% of FXN’s weight, but that does not mean FXN is littered with unproven small-caps or bereft of the energy names investors are most familiar with. FXN uses a variety of growth and value factors to select its 59 components and the value factor is apparent as names like Chevron, Conoco, Marathon Oil (NYSE: MRO) and Occidental Petroleum (NYSE: OXY) are found among the ETF’s top-10 holdings.
Nearly two-thirds of FXN’s lineup is devoted to exploration and production and integrated oil firms with almost 30% allocated to services providers. The methodology backing FXN has worked as the ETF is up 7.6% over the past 90 days, a period in which it has bested its cap-weighted rivals. [An Oil ETF With Big Upside]
Of course, 90 days is hardly a long enough period for longer-term investors to make a decision on one ETF’s superiority over another.
As is the case with nearly every alternative index sector ETF on the market today, there are times when these funds outperform their cap-weighted rivals and periods when traditional sector ETFs win. Over the past year and five years, the StrataQuant Energy Index, FXN’s underlying index, has beaten the Russell 1000 Energy while the Russell index is the winner over the three year-period ending March 31, 2014, according to First Trust data.
First Trust Energy AlphaDEX Fund
ETF Trends editorial team contributed to this post.