We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is First Trust India NIFTY 50 Equal Weight ETF (NFTY) a Strong ETF Right Now?
Read MoreHide Full Article
Designed to provide broad exposure to the Asia-Pacific (Emerging) ETFs category of the market, the First Trust India NIFTY 50 Equal Weight ETF (NFTY - Free Report) is a smart beta exchange traded fund launched on 02/14/2012.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $200.38 million, this makes it one of the average sized ETFs in the Asia-Pacific (Emerging) ETFs. NFTY is managed by First Trust Advisors. NFTY seeks to match the performance of the NIFTY 50 EQUAL WEIGHT INDEX before fees and expenses.
The NIFTY 50 Equal Weight Index is an equally weighted index that tracks the performance of the 50 largest and most liquid Indian securities listed on the National Stock Exchange of India.
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.
Operating expenses on an annual basis are 0.80% for NFTY, making it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.17%.
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.
Looking at individual holdings, Tata Motors Limited (TTMT.IS) accounts for about 2.50% of total assets, followed by Bharat Petroleum Corporation Limited (BPCL.IS) and Bajaj Auto Limited (BJAUT.IS).
Its top 10 holdings account for approximately 23.61% of NFTY's total assets under management.
Performance and Risk
So far this year, NFTY has gained about 6.32%, and was up about 32.51% in the last one year (as of 04/26/2024). During this past 52-week period, the fund has traded between $44.04 and $58.15.
The ETF has a beta of 0.76 and standard deviation of 18.20% for the trailing three-year period. With about 52 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust India NIFTY 50 Equal Weight ETF is a reasonable option for investors seeking to outperform the Asia-Pacific (Emerging) ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
WisdomTree India Earnings ETF (EPI - Free Report) tracks WisdomTree India Earnings Index and the iShares MSCI India ETF (INDA - Free Report) tracks MSCI India Total Return Index. WisdomTree India Earnings ETF has $2.99 billion in assets, iShares MSCI India ETF has $9.62 billion. EPI has an expense ratio of 0.85% and INDA charges 0.65%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Asia-Pacific (Emerging) 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is First Trust India NIFTY 50 Equal Weight ETF (NFTY) a Strong ETF Right Now?
Designed to provide broad exposure to the Asia-Pacific (Emerging) ETFs category of the market, the First Trust India NIFTY 50 Equal Weight ETF (NFTY - Free Report) is a smart beta exchange traded fund launched on 02/14/2012.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $200.38 million, this makes it one of the average sized ETFs in the Asia-Pacific (Emerging) ETFs. NFTY is managed by First Trust Advisors. NFTY seeks to match the performance of the NIFTY 50 EQUAL WEIGHT INDEX before fees and expenses.
The NIFTY 50 Equal Weight Index is an equally weighted index that tracks the performance of the 50 largest and most liquid Indian securities listed on the National Stock Exchange of India.
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.
Operating expenses on an annual basis are 0.80% for NFTY, making it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.17%.
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.
Looking at individual holdings, Tata Motors Limited (TTMT.IS) accounts for about 2.50% of total assets, followed by Bharat Petroleum Corporation Limited (BPCL.IS) and Bajaj Auto Limited (BJAUT.IS).
Its top 10 holdings account for approximately 23.61% of NFTY's total assets under management.
Performance and Risk
So far this year, NFTY has gained about 6.32%, and was up about 32.51% in the last one year (as of 04/26/2024). During this past 52-week period, the fund has traded between $44.04 and $58.15.
The ETF has a beta of 0.76 and standard deviation of 18.20% for the trailing three-year period. With about 52 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust India NIFTY 50 Equal Weight ETF is a reasonable option for investors seeking to outperform the Asia-Pacific (Emerging) ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
WisdomTree India Earnings ETF (EPI - Free Report) tracks WisdomTree India Earnings Index and the iShares MSCI India ETF (INDA - Free Report) tracks MSCI India Total Return Index. WisdomTree India Earnings ETF has $2.99 billion in assets, iShares MSCI India ETF has $9.62 billion. EPI has an expense ratio of 0.85% and INDA charges 0.65%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Asia-Pacific (Emerging) 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.