First Trust Consumer Staples AlphaDEXFXG

Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough

Suitability
First Trust Consumer Staples AlphaDEX should be treated as a complementary satellite holding to a diversified portfolio. This exchange-traded fund, which offers exposure to household names whose products consumers buy regardless Read more

Bull Case

The portfolio is filled with defensive firms, which tend to produce relatively stable and reliable cash flows.

Many of the companies held in this ETF are able to extract pricing from consumers, even in the face of rising commodity costs.

This ETF offers much more of a mid-cap tilt than do other consumer staples ETFs. As such, we believe it provides purer exposure to the U.S. consumer staples sector than do some of its peers, whose holdings include large mass retailers and conglomerates with meaningful overseas businesses. Read more

Bear Case

The defensive nature of the businesses included in this ETF may mitigate the downside in a severe economic downturn, but that doesn't mean investors won't experience periods of negative returns.

The premier brands included in this ETF's portfolio always are at risk of value-conscious consumers trading down to generic brands during economic slowdowns.

Higher commodity input costs could hurt some of the more commoditylike firms in this ETF, such as Dean Foods. Read more