Should You Invest in the First Trust Health Care AlphaDEX ETF (FXH)?

If you're interested in broad exposure to the Healthcare - Broad segment of the equity market, look no further than the First Trust Health Care AlphaDEX ETF (FXH), 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.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.13 billion, making it one of the larger ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. FXH seeks to match the performance of the StrataQuant Health Care Index before fees and expenses.

The StrataQuant Health Care Index employs the AlphaDEX stock selection methodology to select stocks from the Russell 1000 Index.

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 0.61%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.78%.

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 Healthcare sector -- about 100% of the portfolio.

The top 10 holdings account for about 24.03% of total assets under management.

Performance and Risk

The ETF has added about 16.32% and is up roughly 25.49% so far this year and in the past one year (as of 08/19/2026), respectively. FXH has traded between $104.58 and $132.23 during this last 52-week period.

The ETF has a beta of 0.73 and standard deviation of 15.46% for the trailing three-year period, making it a medium risk choice in the space. With about 74 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Health Care AlphaDEX ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FXH is a sufficient option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Health Care Index Fund ETF Shares (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the State Street Health Care Select Sector SPDR ETF ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care Index Fund ETF Shares has $19.16 billion in assets, State Street Health Care Select Sector SPDR ETF ETF has $44.41 billion. VHT has an expense ratio of 0.09%, and XLV charges 0.08%.

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

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