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Is First Trust NASDAQ Food & Beverage ETF (FTXG) a Strong ETF Right Now?
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The First Trust NASDAQ Food & Beverage ETF (FTXG - Free Report) made its debut on 09/20/2016, and is a smart beta exchange traded fund that provides broad exposure to the Consumer Staples ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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.
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 managed by First Trust Advisors, and has been able to amass over $996.82 million, which makes 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.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.40%.
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.
FTXG's heaviest allocation is in the Consumer Staples sector, which is about 96.50% of the portfolio.
Looking at individual holdings, General Mills, Inc. (GIS - Free Report) accounts for about 8.36% of total assets, followed by Mondelez International, Inc. (MDLZ - Free Report) and Pepsico, Inc. (PEP - Free Report) .
Its top 10 holdings account for approximately 60.5% of FTXG's total assets under management.
Performance and Risk
So far this year, FTXG has added roughly 1.24%, and is down about -0.05% in the last one year (as of 05/17/2023). During this past 52-week period, the fund has traded between $24.82 and $28.24.
The fund has a beta of 0.60 and standard deviation of 16.69% 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 $2.65 million in assets, Invesco Dynamic Food & Beverage ETF has $332.78 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?
The First Trust NASDAQ Food & Beverage ETF (FTXG - Free Report) made its debut on 09/20/2016, and is a smart beta exchange traded fund that provides broad exposure to the Consumer Staples ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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.
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 managed by First Trust Advisors, and has been able to amass over $996.82 million, which makes 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.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.40%.
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.
FTXG's heaviest allocation is in the Consumer Staples sector, which is about 96.50% of the portfolio.
Looking at individual holdings, General Mills, Inc. (GIS - Free Report) accounts for about 8.36% of total assets, followed by Mondelez International, Inc. (MDLZ - Free Report) and Pepsico, Inc. (PEP - Free Report) .
Its top 10 holdings account for approximately 60.5% of FTXG's total assets under management.
Performance and Risk
So far this year, FTXG has added roughly 1.24%, and is down about -0.05% in the last one year (as of 05/17/2023). During this past 52-week period, the fund has traded between $24.82 and $28.24.
The fund has a beta of 0.60 and standard deviation of 16.69% 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 $2.65 million in assets, Invesco Dynamic Food & Beverage ETF has $332.78 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.