The First Trust Technology AlphaDEX Fund (NYSEArca: FXL) is among the myriad technology exchange traded funds that have recently been hitting record highs as the fund’s smart beta methodology proves advantageous for investors. The $662.5 million FXL once again joined the all-time high club on Thursday.
The tech sector could even see more free cash on hand if Congress proceeds with plans to cut down capital gains on repatriated earnings or follow in President-elect Donald Trump’s proposed repatriation tax holiday policy that would encourage large multi-national companies to bring back hundreds of billions of dollars in cash to the U.S. for possible use in dividends, deals or other projects. Trump plans to levy a 10% repatriation tax on U.S. companies’ overseas profits from foreign subsidiaries, compared to the current 35% tax rate.
FXL also features other significant differences compared to traditional technology ETFs, such as the Technology Select Sector SPDR (NYSEArca: XLK) and the Vanguard Information Technology ETF (NYSEArca: VGT).
Large institutional traders may enjoy the robust liquidity found in XLK, but long-term investors who are less concerned about day-to-date, bid-ask spreads may like the cheaper 0.10% expense ratio found in VGT, compared to XLK’s 0.14% expense ratio. With FXL, investors will not find the significant weights to tech titans such as Apple (NasdaqGS: AAPL) and Microsoft (NasadaqGS: MSFT) as they will find with an ETF like XLK or VGT.