We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is First Trust NASDAQ Food & Beverage ETF (FTXG) a Strong ETF Right Now?
Read MoreHide Full Article
Designed to provide broad exposure to the Consumer Staples ETFs category of the market, the First Trust NASDAQ Food & Beverage ETF (FTXG - Free Report) is a smart beta exchange traded fund launched on 09/20/2016.
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.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $893.45 million, making it one of the average sized ETFs in the Consumer Staples ETFs. Before fees and expenses, FTXG seeks to match the performance of the Nasdaq US Smart Food & Beverage Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for FTXG are 0.60%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.57%.
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.
This ETF has heaviest allocation in the Consumer Staples sector - about 95.70% of the portfolio.
Looking at individual holdings, Molson Coors Beverage Company (TAP - Free Report) accounts for about 8.35% of total assets, followed by Kellogg Company (K - Free Report) and Tyson Foods, Inc. (class A) (TSN - Free Report) .
Its top 10 holdings account for approximately 58.92% of FTXG's total assets under management.
Performance and Risk
The ETF has added roughly 3.88% and was up about 11.32% so far this year and in the past one year (as of 09/08/2022), respectively. FTXG has traded between $24 and $28.98 during this last 52-week period.
FTXG has a beta of 0.59 and standard deviation of 21.48% 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 $2.78 million in assets, Invesco Dynamic Food & Beverage ETF has $317.92 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is First Trust NASDAQ Food & Beverage ETF (FTXG) a Strong ETF Right Now?
Designed to provide broad exposure to the Consumer Staples ETFs category of the market, the First Trust NASDAQ Food & Beverage ETF (FTXG - Free Report) is a smart beta exchange traded fund launched on 09/20/2016.
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.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $893.45 million, making it one of the average sized ETFs in the Consumer Staples ETFs. Before fees and expenses, FTXG seeks to match the performance of the Nasdaq US Smart Food & Beverage Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for FTXG are 0.60%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.57%.
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.
This ETF has heaviest allocation in the Consumer Staples sector - about 95.70% of the portfolio.
Looking at individual holdings, Molson Coors Beverage Company (TAP - Free Report) accounts for about 8.35% of total assets, followed by Kellogg Company (K - Free Report) and Tyson Foods, Inc. (class A) (TSN - Free Report) .
Its top 10 holdings account for approximately 58.92% of FTXG's total assets under management.
Performance and Risk
The ETF has added roughly 3.88% and was up about 11.32% so far this year and in the past one year (as of 09/08/2022), respectively. FTXG has traded between $24 and $28.98 during this last 52-week period.
FTXG has a beta of 0.59 and standard deviation of 21.48% 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 $2.78 million in assets, Invesco Dynamic Food & Beverage ETF has $317.92 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.