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Is First Trust NASDAQ Oil & Gas ETF (FTXN) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) debuted on 09/20/2016, and offers broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.18 billion, this makes it one of the larger ETFs in the Energy ETFs. FTXN is managed by First Trust Advisors. FTXN, before fees and expenses, seeks to match the performance of the Nasdaq US Smart Oil & Gas Index.
The Nasdaq US Smart Oil & Gas Index is a modified factor weighted index, designed to provide exposure to US companies within the oil and gas industry.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.90%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Energy sector.
Looking at individual holdings, The Williams Companies, Inc, (WMB - Free Report) accounts for about 6.72% of total assets, followed by Chevron Corporation (CVX - Free Report) and Kinder Morgan, Inc, (KMI - Free Report) .
Its top 10 holdings account for approximately 48.37% of FTXN's total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ Oil & Gas ETF has added about 12.64% so far, and is up roughly 58.55% over the last 12 months (as of 02/21/2022). FTXN has traded between $14.75 and $23.50 in this past 52-week period.
The ETF has a beta of 1.55 and standard deviation of 41.13% for the trailing three-year period. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Oil & Gas ETF is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $7.25 billion in assets, Energy Select Sector SPDR ETF has $34.71 billion. VDE has an expense ratio of 0.10% and XLE charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is First Trust NASDAQ Oil & Gas ETF (FTXN) a Strong ETF Right Now?
A smart beta exchange traded fund, the First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) debuted on 09/20/2016, and offers broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $1.18 billion, this makes it one of the larger ETFs in the Energy ETFs. FTXN is managed by First Trust Advisors. FTXN, before fees and expenses, seeks to match the performance of the Nasdaq US Smart Oil & Gas Index.
The Nasdaq US Smart Oil & Gas Index is a modified factor weighted index, designed to provide exposure to US companies within the oil and gas industry.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.90%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Energy sector.
Looking at individual holdings, The Williams Companies, Inc, (WMB - Free Report) accounts for about 6.72% of total assets, followed by Chevron Corporation (CVX - Free Report) and Kinder Morgan, Inc, (KMI - Free Report) .
Its top 10 holdings account for approximately 48.37% of FTXN's total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ Oil & Gas ETF has added about 12.64% so far, and is up roughly 58.55% over the last 12 months (as of 02/21/2022). FTXN has traded between $14.75 and $23.50 in this past 52-week period.
The ETF has a beta of 1.55 and standard deviation of 41.13% for the trailing three-year period. With about 50 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Oil & Gas ETF is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $7.25 billion in assets, Energy Select Sector SPDR ETF has $34.71 billion. VDE has an expense ratio of 0.10% and XLE charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.