Investing Port

This ETF offers exposure to the U.S. energy sector, seeking to replicate an index that employs a unique strategy designed to generate excess returns relative to traditional cap-weighted benchmarks. As such, FXN is probably too targeted for some investors, but can be a useful tool in sector rotation strategies and an efficient means of tilting exposure towards the energy sector (it may also be useful in long/short pairs trades). The underlying AlphaDEX Index employs a quant-based screening methodology designed to identify stocks poised for outperformance relative to a broader universe consisting of oil and gas stocks. In return for exposure to this strategy, which has historically delivered impressive returns across the entire suite, investors can expect to pay a bit more; FXN's expense ratio is about 50 basis points higher than low cost options for financial exposure such as FEG and XLE. The unique index construction methodology has some other potential advantages; FXN maintains much lower concentration of top holdings than do cap-weighted funds such as XLE. As such, performance isn't as dependent on a handful of large cap stocks, potentially giving a better way to access financials. For those who believe in the merits of the AlphaDEX methodology and willing to pay a little extra for a shot at alpha, FXG can be an excellent way to gain exposure to the energy sector.