FXZ vs XLB

FXZDFirst Trust Materials AlphaDEX Fund

XLBAState Street Materials Select Sector SPDR ETF

In short

FXZ Most materials ETFs hand you the sector exactly as the market weights it. FXZ re-sorts it: the AlphaDEX rules rank Russell 1000 materials stocks on growth and value measures, then hold roughly 40 of them. Same sector, different shopping list.

XLB The original materials play. A 1998-vintage slice of the S&P 500's chemical, mining, packaging and building-materials names, run at eight basis points and traded in size all day long.

Stated mandate

FXZ The fund seeks to track the performance of the StrataQuant® Materials Index, an equity index that applies the AlphaDEX® methodology to selected Russell 1000® materials-sector stocks.

XLB The fund seeks to track, before expenses, the price and yield performance of the Materials Select Sector Index.

Why people hold it

• FXZ Not a cap-weighted sector wrapper. The AlphaDEX screen ranks Russell 1000 materials names on growth and value measures and keeps roughly 40, so weight follows the screen rather than company size.ftportfolios.com
• In a sector where a handful of chemical and industrial-gas giants dominate cap-weighted funds, the rules push meaningful weight toward smaller and mid-sized materials companies.ftportfolios.com
• Running since 2007, which gives the methodology a long public track record across full commodity and rate cycles instead of a few years of backtest.

• XLB Charges 0.08% a year against a peer-group median of 0.38%, and nothing in the cohort undercuts it (FMAT matches).
• Trading since December 1998 as one of the original Select Sector SPDRs, with a multi-billion-dollar asset base behind it.sec.gov
• Very actively traded for a sector fund, which is the whole point if you use it for tactical tilts rather than buy-and-forget.
• Clean mandate: chemicals, metals and mining, paper and forest products, containers and packaging, construction materials. No thematic drift.ssga.com

Worth knowing

• FXZ Cost is the trade-off: 0.64% a year, one of the pricier options in the materials group, where the big cap-weighted funds (XLB, VAW, FMAT) charge single-digit basis points.
• A screened portfolio of roughly 40 names can behave quite differently from the plain materials sector in either direction. It tracks the StrataQuant Materials Index, not the sector everyone quotes.
• Trading is moderate rather than heavy, so spreads and order size matter more here than with the most heavily traded funds in the category. Distributions come quarterly.

• XLB Around 26 stocks, and index rules let one name reach 25% at a quarter-end measurement. A couple of chemical giants carry outsized weight.sec.gov
• The universe is the S&P 500 only. Smaller miners and specialty producers sit outside the net, which is the water VAW and XME fish in.ssga.com
• One sector, tied to commodity prices and building demand, so it can travel a very different path from the broad market. Distributions come quarterly.ssga.com

Full FXZ profile⁠

Full XLB profile⁠