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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?
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by First Trust Advisors, FTXN has amassed assets over $845.48 million, making it one of the larger ETFs in the Energy ETFs. FTXN seeks to match the performance of the Nasdaq US Smart Oil & Gas Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.60%.
FTXN's 12-month trailing dividend yield is 1.20%.
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.
This ETF has heaviest allocation in the Energy sector - about 100% of the portfolio.
Looking at individual holdings, Sm Energy Company (SM - Free Report) accounts for about 9.84% of total assets, followed by Centennial Resource Development, Inc (class A) and Cheniere Energy, Inc. (LNG - Free Report) .
FTXN's top 10 holdings account for about 60.06% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ Oil & Gas ETF has gained about 59.01% so far, and was up about 56.25% over the last 12 months (as of 12/21/2021). FTXN has traded between $11.39 and $21.73 in this past 52-week period.
The ETF has a beta of 1.68 and standard deviation of 41.04% 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 $5.59 billion in assets, Energy Select Sector SPDR ETF has $24.59 billion. VDE has an expense ratio of 0.10% and XLE charges 0.12%.
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?
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by First Trust Advisors, FTXN has amassed assets over $845.48 million, making it one of the larger ETFs in the Energy ETFs. FTXN seeks to match the performance of the Nasdaq US Smart Oil & Gas Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.60%.
FTXN's 12-month trailing dividend yield is 1.20%.
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.
This ETF has heaviest allocation in the Energy sector - about 100% of the portfolio.
Looking at individual holdings, Sm Energy Company (SM - Free Report) accounts for about 9.84% of total assets, followed by Centennial Resource Development, Inc (class A) and Cheniere Energy, Inc. (LNG - Free Report) .
FTXN's top 10 holdings account for about 60.06% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ Oil & Gas ETF has gained about 59.01% so far, and was up about 56.25% over the last 12 months (as of 12/21/2021). FTXN has traded between $11.39 and $21.73 in this past 52-week period.
The ETF has a beta of 1.68 and standard deviation of 41.04% 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 $5.59 billion in assets, Energy Select Sector SPDR ETF has $24.59 billion. VDE has an expense ratio of 0.10% and XLE charges 0.12%.
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.