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Is First Trust NASDAQ Oil & Gas ETF (FTXN) a Strong ETF Right Now?
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Launched on 09/20/2016, the First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) is a smart beta exchange traded fund offering 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $223.49 million, making 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
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 3.01%.
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.
FTXN's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
Taking into account individual holdings, Conocophillips (COP - Free Report) accounts for about 7.86% of the fund's total assets, followed by Marathon Petroleum Corporation (MPC - Free Report) and Exxon Mobil Corporation (XOM - Free Report) .
FTXN's top 10 holdings account for about 57.1% of its total assets under management.
Performance and Risk
The ETF has added about 12.48% so far this year and is up about 26.28% in the last one year (as of 05/21/2024). In the past 52-week period, it has traded between $24.83 and $33.62.
FTXN has a beta of 1.30 and standard deviation of 32.02% 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 an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $8.85 billion in assets, Energy Select Sector SPDR ETF has $39.54 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?
Launched on 09/20/2016, the First Trust NASDAQ Oil & Gas ETF (FTXN - Free Report) is a smart beta exchange traded fund offering 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $223.49 million, making 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
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 3.01%.
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.
FTXN's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
Taking into account individual holdings, Conocophillips (COP - Free Report) accounts for about 7.86% of the fund's total assets, followed by Marathon Petroleum Corporation (MPC - Free Report) and Exxon Mobil Corporation (XOM - Free Report) .
FTXN's top 10 holdings account for about 57.1% of its total assets under management.
Performance and Risk
The ETF has added about 12.48% so far this year and is up about 26.28% in the last one year (as of 05/21/2024). In the past 52-week period, it has traded between $24.83 and $33.62.
FTXN has a beta of 1.30 and standard deviation of 32.02% 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 an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $8.85 billion in assets, Energy Select Sector SPDR ETF has $39.54 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.