The First Trust NASDAQ Bank ETF (FTXO Quick QuoteFTXO - Free Report) was launched on 09/20/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Financials ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

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.

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

FTXO is managed by First Trust Advisors, and this fund has amassed over $335.79 million, which makes it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, FTXO seeks to match the performance of the Nasdaq US Smart Banks Index.

The Nasdaq US Smart Banks Index is a modified factor weighted index, designed to provide exposure to US companies within the banking industry.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 1.75%.

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.

For FTXO, it has heaviest allocation in the Financials sector --about 100% of the portfolio.

When you look at individual holdings, Citigroup Inc. (C) accounts for about 8.75% of the fund's total assets, followed by Truist Financial Corporation (TFC) and Jpmorgan Chase & Co. (JPM).

Its top 10 holdings account for approximately 60.64% of FTXO's total assets under management.

Performance and Risk

So far this year, FTXO return is roughly 2.71%, and it's up approximately 43.7% in the last one year (as of 04/16/2026). During this past 52-week period, the fund has traded between $26.99 and $41.45.

FTXO has a beta of 0.92 and standard deviation of 25.01% for the trailing three-year period. With about 48 holdings, it has more concentrated exposure than peers .

Alternatives

First Trust NASDAQ Bank ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

State Street SPDR S&P Bank ETF (KBE) tracks S&P Banks Select Industry Index and the Invesco KBW Bank ETF (KBWB) tracks KBW Nasdaq Bank index. State Street SPDR S&P Bank ETF has $1.42 billion in assets, Invesco KBW Bank ETF has $5.36 billion. KBE has an expense ratio of 0.35% and KBWB changes 0.35%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials 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.