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Should You Invest in the First Trust NASDAQ Transportation ETF (FTXR)?

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If you're interested in broad exposure to the Industrials - Transportation/Shipping segment of the equity market, look no further than the First Trust NASDAQ Transportation ETF (FTXR - Free Report) , a passively managed exchange traded fund launched on 09/20/2016.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Transportation/Shipping is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $1.14 billion, making it one of the average sized ETFs attempting to match the performance of the Industrials - Transportation/Shipping segment of the equity market. FTXR seeks to match the performance of the Nasdaq US Smart Transportation Index before fees and expenses.

The Nasdaq US Smart Transportation Index is a modified factor weighted index, designed to provide exposure to US companies within the transportation industry.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.73%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector--about 78.60% of the portfolio, followed by Consumer Discretionary.

Looking at individual holdings, Ford Motor Company (F - Free Report) accounts for about 8.31% of total assets, followed by Old Dominion Freight Line, Inc, (ODFL - Free Report) and Union Pacific Corporation (UNP - Free Report) .

The top 10 holdings account for about 54.85% of total assets under management.

Performance and Risk

Year-to-date, the First Trust NASDAQ Transportation ETF has lost about -8.50% so far, and was up about 5.74% over the last 12 months (as of 02/21/2022). FTXR has traded between $30.24 and $35.96 in this past 52-week period.

The ETF has a beta of 1.37 and standard deviation of 30.43% for the trailing three-year period. With about 30 holdings, it has more concentrated exposure than peers.

Alternatives

First Trust NASDAQ Transportation ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FTXR is a great option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that 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 $1.59 billion in assets, U.S. Global Jets ETF has $3.92 billion. IYT has an expense ratio of 0.41% and JETS charges 0.60%.

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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