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Financial ETF (FXO) Hits New 52-Week High

For investors seeking momentum, First Trust Financials AlphaDEX Fund FXO is probably on radar now. The fund just hit a 52-week high, and is up about 29% from its 52-week low price of $23.56/share.

But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:

FXO in Focus    

This fund targets the financial segment of the broad U.S. market and uses the AlphaDEX methodology to select stocks from the Russell 1000 Index. The approach results in a basket of 182 securities, which are widely spread across components, with none holding more than 1.13% of assets. The product has key holdings in insurance, capital markets, banks, and REITs. It charges investors 64 basis points a year in fees (see: all the Financial ETFs here).

Why the Move?

The financial space has been an area to watch lately given that the Fed is on track to reverse quantitative easing (QE) program this month. The move will push Treasury yields higher, and in turn benefit the financial sector. Further, the appointment of Jerome Powell as the next Fed Chair is a positive catalyst for the sector as he supports deregulation and is expected to roll back regulations adopted in the wake of the 2008 economic crisis, including the Dodd-Frank rules.

More Gains Ahead?

Currently, FXO has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook, suggesting that the outperformance could continue in the months ahead. Further, many of the segments that make up this ETF have a strong Zacks Industry Rank, so there is definitely still some promise for those who want to ride on this surging ETF a little longer.

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FT-FINL ALPHA (FXO): ETF Research Reports
 
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