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Is First Trust NASDAQ Food & Beverage ETF (FTXG) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust NASDAQ Food & Beverage ETF (FTXG - Free Report) debuted on 09/20/2016, and offers broad exposure to the Consumer Staples 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.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
FTXG is managed by First Trust Advisors, and this fund has amassed over $1.03 billion, which makes it one of the average sized ETFs in the Consumer Staples ETFs. FTXG, before fees and expenses, 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
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.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.55%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector - about 96.40% of the portfolio.
Taking into account individual holdings, General Mills, Inc. (GIS - Free Report) accounts for about 8.01% of the fund's total assets, followed by Campbell Soup Company (CPB - Free Report) and Molson Coors Beverage Company (TAP - Free Report) .
FTXG's top 10 holdings account for about 59.1% of its total assets under management.
Performance and Risk
The ETF has lost about -3.07% so far this year and is up roughly 3.12% in the last one year (as of 03/17/2023). In the past 52-week period, it has traded between $24.82 and $28.98.
The ETF has a beta of 0.60 and standard deviation of 19.16% 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 $2.63 million in assets, Invesco Dynamic Food & Beverage ETF has $318.58 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?
A smart beta exchange traded fund, the First Trust NASDAQ Food & Beverage ETF (FTXG - Free Report) debuted on 09/20/2016, and offers broad exposure to the Consumer Staples 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.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
FTXG is managed by First Trust Advisors, and this fund has amassed over $1.03 billion, which makes it one of the average sized ETFs in the Consumer Staples ETFs. FTXG, before fees and expenses, 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
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.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.55%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector - about 96.40% of the portfolio.
Taking into account individual holdings, General Mills, Inc. (GIS - Free Report) accounts for about 8.01% of the fund's total assets, followed by Campbell Soup Company (CPB - Free Report) and Molson Coors Beverage Company (TAP - Free Report) .
FTXG's top 10 holdings account for about 59.1% of its total assets under management.
Performance and Risk
The ETF has lost about -3.07% so far this year and is up roughly 3.12% in the last one year (as of 03/17/2023). In the past 52-week period, it has traded between $24.82 and $28.98.
The ETF has a beta of 0.60 and standard deviation of 19.16% 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 $2.63 million in assets, Invesco Dynamic Food & Beverage ETF has $318.58 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.