Designed to provide broad exposure to the Financials - Banking segment of the equity market, the First Trust NASDAQ Bank ETF (
FTXO Quick Quote FTXO - Free Report) is a passively managed exchange traded fund launched on 09/20/2016.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Banking is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $231.80 million, making it one of the average sized ETFs attempting to match the performance of the Financials - Banking segment of the equity market. FTXO seeks to match the performance of the Nasdaq US Smart Banks Index before fees and expenses.
The Nasdaq US Smart Banks Index is a modified factor weighted index, designed to provide exposure to US companies within the banking industry.
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.
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 2.28%.
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 Financials sector--about 100% of the portfolio.
Looking at individual holdings, Popular, Inc. (
BPOP Quick Quote BPOP - Free Report) accounts for about 8.50% of total assets, followed by M&t Bank Corporation ( MTB Quick Quote MTB - Free Report) and Wells Fargo & Company ( WFC Quick Quote WFC - Free Report) .
The top 10 holdings account for about 60.03% of total assets under management.
Performance and Risk
So far this year, FTXO has lost about -13.63%, and is down about -6.31% in the last one year (as of 09/20/2022). During this past 52-week period, the fund has traded between $25.42 and $37.
The ETF has a beta of 1.18 and standard deviation of 40.31% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
First Trust NASDAQ Bank 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, FTXO is an outstanding option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Invesco KBW Bank ETF (
KBWB Quick Quote KBWB - Free Report) tracks KBW Nasdaq Bank index and the SPDR S&P Bank ETF ( KBE Quick Quote KBE - Free Report) tracks S&P Banks Select Industry Index. Invesco KBW Bank ETF has $1.99 billion in assets, SPDR S&P Bank ETF has $2.11 billion. KBWB has an expense ratio of 0.35% and KBE charges 0.35%. Bottom Line
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