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Is First Trust NASDAQ Food & Beverage ETF (FTXG) a Strong ETF Right Now?
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Launched on 09/20/2016, the First Trust NASDAQ Food & Beverage ETF (FTXG - Free Report) is a smart beta exchange traded fund offering broad exposure to the Consumer Staples ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $805.69 million, this makes it one of the average sized ETFs in the Consumer Staples ETFs. FTXG is managed by First Trust Advisors. This particular fund seeks to match the performance of the Nasdaq US Smart Food & Beverage Index before fees and expenses.
The Nasdaq US Smart Food & Beverage Index is a modified factor weighted index, designed to provide exposure to US companies within the food and beverage industry.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.60% for FTXG, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.61%.
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.
For FTXG, it has heaviest allocation in the Consumer Staples sector --about 95.70% of the portfolio.
When you look at individual holdings, Archer-Daniels-Midland Company (ADM - Free Report) accounts for about 8.95% of the fund's total assets, followed by Bunge Limited (BG - Free Report) and Tyson Foods, Inc. (class A) (TSN - Free Report) .
Its top 10 holdings account for approximately 57.57% of FTXG's total assets under management.
Performance and Risk
The ETF has gained about 1.48% so far this year and was up about 3.97% in the last one year (as of 07/08/2022). In the past 52-week period, it has traded between $24 and $28.98.
The fund has a beta of 0.60 and standard deviation of 21.41% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Food & Beverage ETF is a reasonable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
VanEck Future of Food ETF tracks ---------------------------------------- and the Invesco Dynamic Food & Beverage ETF (PBJ - Free Report) tracks Dynamic Food & Beverage Intellidex Index. VanEck Future of Food ETF has $2.93 million in assets, Invesco Dynamic Food & Beverage ETF has $286.49 million. YUMY has an expense ratio of 0.69% and PBJ charges 0.63%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Staples 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 Food & Beverage ETF (FTXG) a Strong ETF Right Now?
Launched on 09/20/2016, the First Trust NASDAQ Food & Beverage ETF (FTXG - Free Report) is a smart beta exchange traded fund offering broad exposure to the Consumer Staples ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $805.69 million, this makes it one of the average sized ETFs in the Consumer Staples ETFs. FTXG is managed by First Trust Advisors. This particular fund seeks to match the performance of the Nasdaq US Smart Food & Beverage Index before fees and expenses.
The Nasdaq US Smart Food & Beverage Index is a modified factor weighted index, designed to provide exposure to US companies within the food and beverage industry.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.60% for FTXG, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.61%.
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.
For FTXG, it has heaviest allocation in the Consumer Staples sector --about 95.70% of the portfolio.
When you look at individual holdings, Archer-Daniels-Midland Company (ADM - Free Report) accounts for about 8.95% of the fund's total assets, followed by Bunge Limited (BG - Free Report) and Tyson Foods, Inc. (class A) (TSN - Free Report) .
Its top 10 holdings account for approximately 57.57% of FTXG's total assets under management.
Performance and Risk
The ETF has gained about 1.48% so far this year and was up about 3.97% in the last one year (as of 07/08/2022). In the past 52-week period, it has traded between $24 and $28.98.
The fund has a beta of 0.60 and standard deviation of 21.41% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Food & Beverage ETF is a reasonable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
VanEck Future of Food ETF tracks ---------------------------------------- and the Invesco Dynamic Food & Beverage ETF (PBJ - Free Report) tracks Dynamic Food & Beverage Intellidex Index. VanEck Future of Food ETF has $2.93 million in assets, Invesco Dynamic Food & Beverage ETF has $286.49 million. YUMY has an expense ratio of 0.69% and PBJ charges 0.63%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Staples 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.