Making its debut on 09/20/2016, smart beta exchange traded fund First Trust NASDAQ Oil & Gas ETF (FTXN Quick QuoteFTXN - Free Report) provides investors broad exposure to the Energy ETFs category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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

Managed by First Trust Advisors, FTXN has amassed assets over $970.56 million, making it one of the larger 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

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.84%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Energy sector - about 100% of the portfolio.

Looking at individual holdings, Conocophillips (COP) accounts for about 7.74% of total assets, followed by Chevron Corporation (CVX) and Exxonmobil Holdings Corp. (XOM).

Its top 10 holdings account for approximately 55.57% of FTXN's total assets under management.

Performance and Risk

The ETF return is roughly 41.33% and was up about 38.71% so far this year and in the past one year (as of 10/02/2026), respectively. FTXN has traded between $26.67 and $41.84 during this last 52-week period.

The fund has a beta of 0.58 and standard deviation of 23.82% for the trailing three-year period. With about 44 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 Index Fund ETF Shares (VDE) tracks MSCI US Investable Market Energy 25/50 Index and the State Street Energy Select Sector SPDR ETF (XLE) tracks Energy Select Sector Index. Vanguard Energy Index Fund ETF Shares has $10.58 billion in assets, State Street Energy Select Sector SPDR ETF has $40.15 billion. VDE has an expense ratio of 0.09% and XLE changes 0.08%.

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.