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Is First Trust NASDAQ Bank ETF (FTXO) a Strong ETF Right Now?
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Launched on 09/20/2016, the First Trust NASDAQ Bank ETF (FTXO - Free Report) is a smart beta exchange traded fund offering broad exposure to the Financials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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
FTXO is managed by First Trust Advisors, and this fund has amassed over $217.60 million, which makes it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, FTXO seeks to match the performance of the Nasdaq US Smart Banks Index.
The Nasdaq US Smart Banks Index is a modified factor weighted index, designed to provide exposure to US companies within the banking 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 this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.52%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Financials sector.
When you look at individual holdings, M&t Bank Corporation (MTB - Free Report) accounts for about 8.35% of the fund's total assets, followed by Wells Fargo & Company (WFC - Free Report) and Popular, Inc. (BPOP - Free Report) .
Its top 10 holdings account for approximately 60.25% of FTXO's total assets under management.
Performance and Risk
The ETF has lost about -14.72% so far this year and is down about -14.34% in the last one year (as of 11/29/2022). In the past 52-week period, it has traded between $25.42 and $37.
The ETF has a beta of 1.15 and standard deviation of 40.84% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Bank ETF is an excellent option for investors seeking to outperform the Financials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco KBW Bank ETF (KBWB - Free Report) tracks KBW Nasdaq Bank index and the SPDR S&P Bank ETF (KBE - Free Report) tracks S&P Banks Select Industry Index. Invesco KBW Bank ETF has $2.12 billion in assets, SPDR S&P Bank ETF has $2.14 billion. KBWB has an expense ratio of 0.35% and KBE charges 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials 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 Bank ETF (FTXO) a Strong ETF Right Now?
Launched on 09/20/2016, the First Trust NASDAQ Bank ETF (FTXO - Free Report) is a smart beta exchange traded fund offering broad exposure to the Financials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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
FTXO is managed by First Trust Advisors, and this fund has amassed over $217.60 million, which makes it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, FTXO seeks to match the performance of the Nasdaq US Smart Banks Index.
The Nasdaq US Smart Banks Index is a modified factor weighted index, designed to provide exposure to US companies within the banking 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 this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.52%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Financials sector.
When you look at individual holdings, M&t Bank Corporation (MTB - Free Report) accounts for about 8.35% of the fund's total assets, followed by Wells Fargo & Company (WFC - Free Report) and Popular, Inc. (BPOP - Free Report) .
Its top 10 holdings account for approximately 60.25% of FTXO's total assets under management.
Performance and Risk
The ETF has lost about -14.72% so far this year and is down about -14.34% in the last one year (as of 11/29/2022). In the past 52-week period, it has traded between $25.42 and $37.
The ETF has a beta of 1.15 and standard deviation of 40.84% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Bank ETF is an excellent option for investors seeking to outperform the Financials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco KBW Bank ETF (KBWB - Free Report) tracks KBW Nasdaq Bank index and the SPDR S&P Bank ETF (KBE - Free Report) tracks S&P Banks Select Industry Index. Invesco KBW Bank ETF has $2.12 billion in assets, SPDR S&P Bank ETF has $2.14 billion. KBWB has an expense ratio of 0.35% and KBE charges 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials 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.