FXZ vs XME

FXZDFirst Trust Materials AlphaDEX Fund

XMEBState Street SPDR S&P Metals & Mining 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.

XME Not the chemicals-heavy materials fund. XME holds roughly 40 miners and steelmakers on a modified equal weight, so a small copper name carries about the weight of a giant. Ore, coal and metal, since 2006.

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.

XME The fund seeks to track, before fees and expenses, the total return performance of the S&P Metals and Mining Select Industry 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.

• XME Pure play on the metals and mining slice: aluminum, coal, copper, gold, precious metals, silver and steel sub-industries, not the whole materials sector.ssga.com
• Modified equal weighting spreads exposure across large, mid and small caps, so the biggest miners don't set the tone for the whole portfolio.ssga.com
• One of the more actively traded funds in its corner of the market, and a multi-billion-dollar fund that has been running since 2006.
• 0.35% expense ratio, slightly under the median for the materials funds we grade, which is unusual for a narrow industry sleeve.

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.

• XME Broad materials funds cost far less: XLB at 0.08% and VAW at 0.09%. They also own a very different mix, chemicals and packaging included.
• About 40 names, many of them smaller miners, in one cyclical industry. Swings run wider than a diversified sector fund's.
• The portfolio's fortunes track commodity cycles in steel, coal, copper and gold rather than broad industrial demand.ssga.com

Full FXZ profile⁠

Full XME profile⁠