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Is First Trust NASDAQ Oil & Gas ETF (FTXN) a Strong ETF Right Now?
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Making its debut on 09/20/2016, smart beta exchange traded fund First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) provides investors broad exposure to the Energy 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
FTXN is managed by First Trust Advisors, and this fund has amassed over $216.91 million, which makes it one of the average sized ETFs in the Energy ETFs. FTXN, before fees and expenses, seeks to match the performance of the Nasdaq US Smart Oil & Gas Index.
The Nasdaq US Smart Oil & Gas Index is a modified factor weighted index, designed to provide exposure to US companies within the oil and gas industry.
Cost & Other Expenses
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 FTXN are 0.60%, which makes it on par with most peer products in the space.
FTXN's 12-month trailing dividend yield is 3.09%.
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.
For FTXN, it has heaviest allocation in the Energy sector --about 100% of the portfolio.
When you look at individual holdings, Conocophillips (COP - Free Report) accounts for about 8.05% of the fund's total assets, followed by Chevron Corporation (CVX - Free Report) and Exxon Mobil Corporation (XOM - Free Report) .
The top 10 holdings account for about 57.58% of total assets under management.
Performance and Risk
So far this year, FTXN has added about 10.26%, and is up about 28.92% in the last one year (as of 03/19/2024). During this past 52-week period, the fund has traded between $24.83 and $31.20.
The fund has a beta of 1.29 and standard deviation of 33.18% for the trailing three-year period. With about 43 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Oil & Gas ETF is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $8.63 billion in assets, Energy Select Sector SPDR ETF has $37.56 billion. VDE has an expense ratio of 0.10% and XLE charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy 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 Oil & Gas ETF (FTXN) a Strong ETF Right Now?
Making its debut on 09/20/2016, smart beta exchange traded fund First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) provides investors broad exposure to the Energy 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
FTXN is managed by First Trust Advisors, and this fund has amassed over $216.91 million, which makes it one of the average sized ETFs in the Energy ETFs. FTXN, before fees and expenses, seeks to match the performance of the Nasdaq US Smart Oil & Gas Index.
The Nasdaq US Smart Oil & Gas Index is a modified factor weighted index, designed to provide exposure to US companies within the oil and gas industry.
Cost & Other Expenses
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 FTXN are 0.60%, which makes it on par with most peer products in the space.
FTXN's 12-month trailing dividend yield is 3.09%.
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.
For FTXN, it has heaviest allocation in the Energy sector --about 100% of the portfolio.
When you look at individual holdings, Conocophillips (COP - Free Report) accounts for about 8.05% of the fund's total assets, followed by Chevron Corporation (CVX - Free Report) and Exxon Mobil Corporation (XOM - Free Report) .
The top 10 holdings account for about 57.58% of total assets under management.
Performance and Risk
So far this year, FTXN has added about 10.26%, and is up about 28.92% in the last one year (as of 03/19/2024). During this past 52-week period, the fund has traded between $24.83 and $31.20.
The fund has a beta of 1.29 and standard deviation of 33.18% for the trailing three-year period. With about 43 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Oil & Gas ETF is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $8.63 billion in assets, Energy Select Sector SPDR ETF has $37.56 billion. VDE has an expense ratio of 0.10% and XLE charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy 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.