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Should You Invest in the First Trust Indxx NextG ETF (NXTG)?

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Designed to provide broad exposure to the Technology - Telecom segment of the equity market, the First Trust Indxx NextG ETF (NXTG - Free Report) is a passively managed exchange traded fund launched on 02/17/2011.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Telecom is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $354.33 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Telecom segment of the equity market. NXTG seeks to match the performance of the INDXX 5G & NEXTG THEMATIC INDEX before fees and expenses.

The Indxx 5G & NextG Thematic Index tracks the performance of companies engaged in the smartphone segment of the telecom and technology sectors.

Costs

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 counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.70%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 1.42%.

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.

Looking at individual holdings, Xiaomi Corporation (class B) (1810.HK) accounts for about 2.15% of total assets, followed by Zte Corporation (class H) (763.HK) and Lenovo Group Limited (992.HK).

The top 10 holdings account for about 15.57% of total assets under management.

Performance and Risk

The ETF return is roughly 2.61% so far this year and is up about 12.90% in the last one year (as of 03/26/2025). In that past 52-week period, it has traded between $73.43 and $90.87.

The ETF has a beta of 0.85 and standard deviation of 16.97% for the trailing three-year period. With about 111 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Indxx NextG ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, NXTG is a sufficient option for those seeking exposure to the Technology ETFs area of the market. Investors might also want to consider some other ETF options in the space.


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