Stocks that are selected for inclusion in FEX are divided in quintiles, and the top-ranked quintiles are weighted higher within the ETF. Within each quintile, the stocks are equally weighted. How does FEX rebalance? FEX rebalances quarterly and is also reconstituted quarterly, so it is certainly possible for a member of the S&P 500 that isn't currently included in FEX during the present quarter due to low scoring according to the First Trust screening to appear in FEX in a future quarter due to some improvement in its scoring, and presumably an improvement in its underlying fundamentals.
Like RSP and RWL, FEX costs more than the benchmark ETFs IVV and SPY at 70 basis points, but it has demonstrated outperformance to the benchmark in the trailing one-year period (up 64.56% with SPY and IVV up 49.78% and 49.64% respectively.) Its performance can be seen here here.
Rebalancing can be achieved through overweighting growth or value, making specific bets on certain sectors within an index to outperform, and overweighting that particular sector while underweighting others, or employing the use of ETFs that have a scheduled rebalance mechanism inherent in their methodologies. A blend of various strategies within one portfolio such as the use of market-cap-weighted ETFs like SPY or IVV in conjunction with equal weighting (RSP), revenue weighting (RWL) and fundamental weighting (FEX), can help put investors over the top of their benchmarks without needing to consciously make growth/value bets nor precisely time which industry sectors will be the winners or losers.
If the net outperformance of alpha-driven ETFs, such as RSP, RWL and FEX, justifies their higher expense ratios, then their effect to the investor's bottom line results can be just as effective and likely much more consistent than having to "call" the market year in and year out.
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