How does the FEDX ETF achieve its investment objective?

The FEDX ETF follows an indexing approach to achieve its investment objective. It does not attempt to "beat" the index it tracks but rather seeks to replicate the performance of the Dow Jones U.S. Select Oil Equipment & Services Index. This indexing strategy aims to lower costs and provide better after-tax performance compared to actively managed investment companies.

What is the investment strategy of the FEDX ETF?

The FEDX ETF uses a representative sampling indexing strategy. This means it invests in a representative sample of securities that collectively have similar investment characteristics to the underlying index. The fund may or may not hold all the securities in the Dow Jones U.S. Select Oil Equipment & Services Index but aims to closely match its performance.

What percentage of the FEDX ETF's assets are invested in the underlying index and related investments?

The FEDX ETF generally invests at least 80% of its assets in the component securities of the Dow Jones U.S. Select Oil Equipment & Services Index and investments that closely resemble these securities. The remaining 20% of its assets may be invested in certain futures, options, swap contracts, cash, cash equivalents, and securities not included in the underlying index but believed to help track its performance.

What is the concentration policy of the FEDX ETF?

The FEDX ETF follows an industry concentration policy. It will concentrate its investments in the oil equipment and services sector to approximately the same extent that the underlying index is concentrated. However, investments in U.S. government securities and repurchase agreements collateralized by such securities are not considered part of any industry for this policy.

5 min read

By Ron Koren, ETF Insider

What is the FEDX ETF ?

In the world of finance, Exchange-Traded Funds (ETFs) have gained immense popularity as an investment vehicle. One such ETF, the FEDX ETF, has been making waves in the market. In this article, we will delve into the details of the FEDX ETF, exploring its underlying assets, benefits, and considerations before investing.

FEDX ETF: Overview

The FEDX ETF is designed to replicate the performance of a specific index by investing a significant portion of its assets in the stocks that make up that index. As of October 22, 2021, the FEDX ETF consists of 19 issues in its underlying index. The Index is composed of U.S. equity securities that provide exposure to the theme of U.S. federal contractors. These companies have at least 40% of their revenue derived from federal contracts with the U.S. government. The Index aims to maintain a weighted average federal contract revenue exposure of 50% or above.

FEDX ETF Underlying and Exposure: What Does it Track and How?

The FEDX ETF's underlying index focuses on companies within the aerospace & defense, information technology, cybersecurity, and healthcare industries. These companies play a crucial role in offering products or services related to the listed sub-themes, making them relevant to the U.S. federal contractor theme. However, it's worth noting that the index might include companies that don't fall directly into the listed sub-themes, as long as they meet the 40% revenue exposure requirement.
The Index Provider, Emles Indexing LLC, uses a proprietary methodology to analyze eligible companies based on publicly available information, such as annual reports and financial news. The companies are then rated and weighted according to their exposure to the applicable sub-themes. The index's rebalancing is done quarterly, with occasional special rebalancing in unique circumstances.

FEDX overlap What is the FEDX ETF ?

FEDX ETF: Benefits to Invest in this ETF

The FEDX ETF offers several advantages to investors. As an ETF, it follows a passive or indexing approach, aiming to replicate the performance of its underlying index rather than actively trying to outperform it. This strategy helps to achieve lower costs and better after-tax performance by keeping portfolio turnover low, reducing some of the risks associated with active management.
Investing in the FEDX ETF provides diversification across a basket of U.S. federal contractors, which can help mitigate individual company-specific risks. Additionally, since the ETF invests in all or most of the component securities of its underlying index, it offers a full replication strategy, aligning its investment profile with that of the index.

FEDX ETF: Considerations Before Investing

While the FEDX ETF presents several advantages, investors should be aware of certain considerations before investing. As the ETF is heavily concentrated in the aerospace and defense industry, its performance can be influenced by developments and trends in that sector. Moreover, its returns are subject to market conditions and the overall performance of the U.S. federal contractors.
Investors should carefully assess their investment goals and risk tolerance before adding the FEDX ETF to their portfolio. It's important to remember that all investments carry inherent risks, and past performance is not indicative of future results.

<h2>Conclusion:</H2> The FEDX ETF provides an attractive opportunity for investors looking to gain exposure to U.S. federal contractors. With its passive indexing approach and diversification benefits, it can be a valuable addition to a well-balanced investment portfolio. However, investors must conduct thorough research and consider their individual circumstances before making any investment decisions.

Disclaimer:
This article is for informational purposes only and does not constitute investment advice or an offer to buy or sell any securities. The information provided here does not take into account individual investment objectives, financial situation, or specific needs. Investing in ETFs involves risks, and investors should seek professional financial advice before making any investment decisions. The author is not providing any investment advisory services.

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FAQ

What is the FEDX ETF?
The FEDX ETF, also known as the FedEx Corporation Exchange-Traded Fund, is an investment fund that aims to track the performance of the Dow Jones U.S. Select Oil Equipment & Services Index. The index measures the performance of the oil equipment and services sector of the U.S. equity market, focusing on companies that provide equipment or services to oil fields and offshore platforms.
How does the FEDX ETF achieve its investment objective?
The FEDX ETF follows an indexing approach to achieve its investment objective. It does not attempt to "beat" the index it tracks but rather seeks to replicate the performance of the Dow Jones U.S. Select Oil Equipment & Services Index. This indexing strategy aims to lower costs and provide better after-tax performance compared to actively managed investment companies.
What is the investment strategy of the FEDX ETF?
The FEDX ETF uses a representative sampling indexing strategy. This means it invests in a representative sample of securities that collectively have similar investment characteristics to the underlying index. The fund may or may not hold all the securities in the Dow Jones U.S. Select Oil Equipment & Services Index but aims to closely match its performance.
What percentage of the FEDX ETF's assets are invested in the underlying index and related investments?
The FEDX ETF generally invests at least 80% of its assets in the component securities of the Dow Jones U.S. Select Oil Equipment & Services Index and investments that closely resemble these securities. The remaining 20% of its assets may be invested in certain futures, options, swap contracts, cash, cash equivalents, and securities not included in the underlying index but believed to help track its performance.
What is the concentration policy of the FEDX ETF?
The FEDX ETF follows an industry concentration policy. It will concentrate its investments in the oil equipment and services sector to approximately the same extent that the underlying index is concentrated. However, investments in U.S. government securities and repurchase agreements collateralized by such securities are not considered part of any industry for this policy.

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