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Is First Trust NASDAQ Oil & Gas ETF (FTXN) a Strong ETF Right Now?
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Making its debut on 09/20/2016, smart beta exchange traded fund First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) provides investors 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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
Managed by First Trust Advisors, FTXN has amassed assets over $1.08 billion, making it one of the larger ETFs in the Energy ETFs. This particular fund 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
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 FTXN, making it on par with most peer products in the space.
FTXN's 12-month trailing dividend yield is 1.71%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
FTXN's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
Looking at individual holdings, Chevron Corporation (CVX - Free Report) accounts for about 7.30% of total assets, followed by Marathon Oil Corporation (MRO - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 52.32% of total assets under management.
Performance and Risk
The ETF has added about 27.83% and is up roughly 42.43% so far this year and in the past one year (as of 06/29/2022), respectively. FTXN has traded between $14.94 and $31.70 during this last 52-week period.
FTXN has a beta of 1.43 and standard deviation of 43.31% for the trailing three-year period. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust NASDAQ Oil & Gas ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $7.78 billion in assets, Energy Select Sector SPDR ETF has $36.06 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?
Making its debut on 09/20/2016, smart beta exchange traded fund First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) provides investors 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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
Managed by First Trust Advisors, FTXN has amassed assets over $1.08 billion, making it one of the larger ETFs in the Energy ETFs. This particular fund 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
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 FTXN, making it on par with most peer products in the space.
FTXN's 12-month trailing dividend yield is 1.71%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
FTXN's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
Looking at individual holdings, Chevron Corporation (CVX - Free Report) accounts for about 7.30% of total assets, followed by Marathon Oil Corporation (MRO - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 52.32% of total assets under management.
Performance and Risk
The ETF has added about 27.83% and is up roughly 42.43% so far this year and in the past one year (as of 06/29/2022), respectively. FTXN has traded between $14.94 and $31.70 during this last 52-week period.
FTXN has a beta of 1.43 and standard deviation of 43.31% for the trailing three-year period. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust NASDAQ Oil & Gas ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $7.78 billion in assets, Energy Select Sector SPDR ETF has $36.06 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.