ETF Research and Analysis

by Robert Goldsborough
First Trust Consumer Staples AlphaDEX FXG is a strategic beta exchange-traded fund that provides exposure to a relatively defensive sector. The reason is that it offers exposure to mega-cap household names whose products   Read more 

Bull Case

Companies held in this fund generally have stable revenue growth and cash flows.
We expect that one use for consumer staples firms' excess cash will be for smaller, bolt-on deals, which we view positively as they would offer the acquisitors the opportunity to get a better handle on the local consumer without having to incur significant financial leverage.
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 retailers held in this ETF operate in very competitive environments that can make margin expansion difficult.
A stronger dollar is hurting some of the firms held in this ETF that have significant foreign revenue.
This ETF's expense ratio is higher than those of some other consumer-focused ETFs. Read more 

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