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Is First Trust NASDAQ Transportation ETF (FTXR) a Strong ETF Right Now?
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The First Trust NASDAQ Transportation ETF (FTXR - Free Report) made its debut on 09/20/2016, and is a smart beta exchange traded fund that provides broad exposure to the Industrials 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
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.09 billion, making it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, FTXR seeks to match the performance of the Nasdaq US Smart Transportation Index.
The Nasdaq US Smart Transportation Index is a modified factor weighted index, designed to provide exposure to US companies within the transportation industry.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.60% for FTXR, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.76%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 78.60% of the portfolio. Consumer Discretionary and Energy round out the top three.
When you look at individual holdings, Ford Motor Company (F - Free Report) accounts for about 8.31% of the fund's total assets, followed by Old Dominion Freight Line, Inc, (ODFL - Free Report) and Union Pacific Corporation (UNP - Free Report) .
Its top 10 holdings account for approximately 54.85% of FTXR's total assets under management.
Performance and Risk
The ETF has lost about -12.34% so far this year and is up about 1.09% in the last one year (as of 02/24/2022). In the past 52-week period, it has traded between $30.24 and $35.96.
The fund has a beta of 1.37 and standard deviation of 30.50% for the trailing three-year period. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Transportation ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
IShares U.S. Transportation ETF (IYT - Free Report) tracks Dow Jones Transportation Average Index and the U.S. Global Jets ETF (JETS - Free Report) tracks U.S. Global Jets Index. IShares U.S. Transportation ETF has $1.53 billion in assets, U.S. Global Jets ETF has $3.75 billion. IYT has an expense ratio of 0.41% and JETS charges 0.60%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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 Transportation ETF (FTXR) a Strong ETF Right Now?
The First Trust NASDAQ Transportation ETF (FTXR - Free Report) made its debut on 09/20/2016, and is a smart beta exchange traded fund that provides broad exposure to the Industrials 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
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.09 billion, making it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, FTXR seeks to match the performance of the Nasdaq US Smart Transportation Index.
The Nasdaq US Smart Transportation Index is a modified factor weighted index, designed to provide exposure to US companies within the transportation industry.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.60% for FTXR, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.76%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 78.60% of the portfolio. Consumer Discretionary and Energy round out the top three.
When you look at individual holdings, Ford Motor Company (F - Free Report) accounts for about 8.31% of the fund's total assets, followed by Old Dominion Freight Line, Inc, (ODFL - Free Report) and Union Pacific Corporation (UNP - Free Report) .
Its top 10 holdings account for approximately 54.85% of FTXR's total assets under management.
Performance and Risk
The ETF has lost about -12.34% so far this year and is up about 1.09% in the last one year (as of 02/24/2022). In the past 52-week period, it has traded between $30.24 and $35.96.
The fund has a beta of 1.37 and standard deviation of 30.50% for the trailing three-year period. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Transportation ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
IShares U.S. Transportation ETF (IYT - Free Report) tracks Dow Jones Transportation Average Index and the U.S. Global Jets ETF (JETS - Free Report) tracks U.S. Global Jets Index. IShares U.S. Transportation ETF has $1.53 billion in assets, U.S. Global Jets ETF has $3.75 billion. IYT has an expense ratio of 0.41% and JETS charges 0.60%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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.