FXR: Sophisticated Strategy With A High Fee Lagging XLI, A Hold
Seeking Alpha
February 20, 2026
AI-Generated Deep Dive Summary
The article compares the performance of the FXR ETF, which focuses on industrials and employs a sophisticated strategy called AlphaDEX, against two well-known industrial sector ETFs: XLI (SPDR S&P Aerospace & Defense ETF) and IVV (iShares Select Sector SPDR Industrial). Despite its higher management fee (60 basis points) compared to XLI and IVV, FXR has underperformed over the long term with higher volatility and drawdowns. The article highlights that while FXR's strategy aims to capture alpha by tilting towards certain market factors, it has struggled to deliver consistent returns, making it a less attractive option for investors seeking reliable industrial sector exposure.
The analysis delves into the nuances of FXR's approach, which involves selecting stocks based on fundamental and technical factors. While this strategy can theoretically outperform broader market indices, the execution has fallen short in practice. The article notes that FXR's higher fees and greater risk have compounded its underperformance, particularly during periods of market uncertainty. This has led to a trade-off between complexity and cost-effectiveness, where simpler and more diversified ETFs like XLI and IVV have proven more resilient over time.
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Originally published on Seeking Alpha on 2/20/2026