FXZ utilizes a quant-driven strategy to pick the 'best' basic materials firms in the US, using growth and value screeners. This minimalist approach, combined with a tiered equal-weighting scheme, leads to a concentrated portfolio that tilts away from large-caps and leans toward mid-caps. The result is major sector tilts, with elevated risk at times. Overall, FXZ offers a smart beta approach to the US basic materials space, instead of providing market-like sector exposure. The index is reconstituted and rebalanced quarterly
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