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Is First Trust NASDAQ Bank ETF (FTXO) a Strong ETF Right Now?
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Designed to provide broad exposure to the Financials ETFs category of the market, the First Trust NASDAQ Bank ETF (FTXO - Free Report) is a smart beta exchange traded fund launched on 09/20/2016.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $276.76 million, which makes it one of the average sized ETFs in the Financials ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq US Smart Banks Index.
The Nasdaq US Smart Banks Index is a modified factor weighted index, designed to provide exposure to US companies within the banking industry.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.60% for FTXO, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.11%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FTXO's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.
Looking at individual holdings, Wells Fargo & Company (WFC - Free Report) accounts for about 8.01% of total assets, followed by Zions Bancorporation (ZION - Free Report) and Keycorp (KEY - Free Report) .
Its top 10 holdings account for approximately 59.96% of FTXO's total assets under management.
Performance and Risk
The ETF has lost about -14.48% and is down about -9.30% so far this year and in the past one year (as of 05/26/2022), respectively. FTXO has traded between $27.26 and $37 during this last 52-week period.
The fund has a beta of 1.20 and standard deviation of 40.02% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Bank ETF is an excellent option for investors seeking to outperform the Financials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco KBW Bank ETF (KBWB - Free Report) tracks KBW Nasdaq Bank index and the SPDR S&P Bank ETF (KBE - Free Report) tracks S&P Banks Select Industry Index. Invesco KBW Bank ETF has $2.06 billion in assets, SPDR S&P Bank ETF has $2.48 billion. KBWB has an expense ratio of 0.35% and KBE charges 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials 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 Bank ETF (FTXO) a Strong ETF Right Now?
Designed to provide broad exposure to the Financials ETFs category of the market, the First Trust NASDAQ Bank ETF (FTXO - Free Report) is a smart beta exchange traded fund launched on 09/20/2016.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $276.76 million, which makes it one of the average sized ETFs in the Financials ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq US Smart Banks Index.
The Nasdaq US Smart Banks Index is a modified factor weighted index, designed to provide exposure to US companies within the banking industry.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.60% for FTXO, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.11%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FTXO's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.
Looking at individual holdings, Wells Fargo & Company (WFC - Free Report) accounts for about 8.01% of total assets, followed by Zions Bancorporation (ZION - Free Report) and Keycorp (KEY - Free Report) .
Its top 10 holdings account for approximately 59.96% of FTXO's total assets under management.
Performance and Risk
The ETF has lost about -14.48% and is down about -9.30% so far this year and in the past one year (as of 05/26/2022), respectively. FTXO has traded between $27.26 and $37 during this last 52-week period.
The fund has a beta of 1.20 and standard deviation of 40.02% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Bank ETF is an excellent option for investors seeking to outperform the Financials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco KBW Bank ETF (KBWB - Free Report) tracks KBW Nasdaq Bank index and the SPDR S&P Bank ETF (KBE - Free Report) tracks S&P Banks Select Industry Index. Invesco KBW Bank ETF has $2.06 billion in assets, SPDR S&P Bank ETF has $2.48 billion. KBWB has an expense ratio of 0.35% and KBE charges 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials 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.