An Interesting Materials Play

Positive market sentiment and a temporary renewal of risk appetite are positive catalysts for material ETFs, but does that mean it's time to stray off the reservation and embrace a name beyond the usual suspects such as the Materials Select Sector SPDR XLB and the iShares Dow Jones US Basic Materials ETF IYM? Maybe, maybe not, but it is worth noting the First Trust Materials AlphaDEX ETF FXZ has performed admirably in the past week, adding 8%, though that trails XLB and IYM. FXZ is nothing if not well balanced as the top-10 holdings account for just over 33% of the ETF's total weight. Names like Cliffs Natural Resources CLF, CF Industries CF and Huntsman HUN dot the lineup. Here's the knock on FXZ: An expense ratio of 0.7%. XLB checks in at just 0.22% and IYM checks in at 0.47%. Volume on FXZ also pales in comparison to its rivals. Bottom line: FXZ will follow its friends higher, but is not likely to outperform and if FXZ won't outperform, why stick around for higher fees? Learn how to find the best stocks to trade each day in our 70 page E-Book and 90 minute online video for free.