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Is First Trust India NIFTY 50 Equal Weight ETF (NFTY) a Strong ETF Right Now?
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The First Trust India NIFTY 50 Equal Weight ETF (NFTY - Free Report) made its debut on 02/14/2012, and is a smart beta exchange traded fund that provides broad exposure to the Asia-Pacific (Emerging) 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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
Managed by First Trust Advisors, NFTY has amassed assets over $284.87 million, making it one of the average sized ETFs in the Asia-Pacific (Emerging) ETFs. This particular fund, before fees and expenses, seeks to match the performance of the NIFTY 50 EQUAL WEIGHT INDEX .
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
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.
Operating expenses on an annual basis are 0.80% for NFTY, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.23%.
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.
When you look at individual holdings, Bharat Petroleum Corporation Limited (BPCL.IS) accounts for about 2.16% of the fund's total assets, followed by Hindalco Industries Limited (HNDL.IS) and Grasim Industries Limited (GRASIM.IS).
The top 10 holdings account for about 20.77% of total assets under management.
Performance and Risk
The ETF has added roughly 12.37% and is up about 29.39% so far this year and in the past one year (as of 10/29/2024), respectively. NFTY has traded between $47.28 and $65.45 during this last 52-week period.
The fund has a beta of 0.79 and standard deviation of 18.45% 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 $3.83 billion in assets, iShares MSCI India ETF has $10.79 billion. EPI has an expense ratio of 0.87% 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.
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Is First Trust India NIFTY 50 Equal Weight ETF (NFTY) a Strong ETF Right Now?
The First Trust India NIFTY 50 Equal Weight ETF (NFTY - Free Report) made its debut on 02/14/2012, and is a smart beta exchange traded fund that provides broad exposure to the Asia-Pacific (Emerging) 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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
Managed by First Trust Advisors, NFTY has amassed assets over $284.87 million, making it one of the average sized ETFs in the Asia-Pacific (Emerging) ETFs. This particular fund, before fees and expenses, seeks to match the performance of the NIFTY 50 EQUAL WEIGHT INDEX .
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
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.
Operating expenses on an annual basis are 0.80% for NFTY, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.23%.
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.
When you look at individual holdings, Bharat Petroleum Corporation Limited (BPCL.IS) accounts for about 2.16% of the fund's total assets, followed by Hindalco Industries Limited (HNDL.IS) and Grasim Industries Limited (GRASIM.IS).
The top 10 holdings account for about 20.77% of total assets under management.
Performance and Risk
The ETF has added roughly 12.37% and is up about 29.39% so far this year and in the past one year (as of 10/29/2024), respectively. NFTY has traded between $47.28 and $65.45 during this last 52-week period.
The fund has a beta of 0.79 and standard deviation of 18.45% 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 $3.83 billion in assets, iShares MSCI India ETF has $10.79 billion. EPI has an expense ratio of 0.87% 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.