Should You Invest in the First Trust NASDAQ Bank ETF (FTXO)?
The First Trust NASDAQ Bank ETF (FTXO) was launched on 09/20/2016, and is a passively managed exchange traded fund designed to offer broad exposure to the Financials - Banking segment of the equity market.
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.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Banking is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.
Index Details
The fund is sponsored by First Trust Advisors. It has amassed assets over $229.36 million, making it one of the average sized ETFs attempting to match the performance of the Financials - Banking segment of the equity market. FTXO seeks to match the performance of the Nasdaq US Smart Banks Index before fees and expenses.
The Nasdaq US Smart Banks Index is a modified factor weighted index, designed to provide exposure to US companies within the banking industry.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 2.45%.
Sector Exposure and Top Holdings
ETFs offer a 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.
This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.
Looking at individual holdings, Wells Fargo & Company (WFC) accounts for about 8.01% of total assets, followed by Zions Bancorporation (ZION) and Keycorp (KEY).
The top 10 holdings account for about 59.96% of total assets under management.
Performance and Risk
The ETF has lost about -19.68% so far this year and is down about -7.35% in the last one year (as of 07/19/2022). In that past 52-week period, it has traded between $25.42 and $37.
The ETF has a beta of 1.21 and standard deviation of 40.42% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust NASDAQ Bank ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FTXO is an excellent option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Invesco KBW Bank ETF (KBWB) tracks KBW Nasdaq Bank index and the SPDR S&P Bank ETF (KBE) tracks S&P Banks Select Industry Index. Invesco KBW Bank ETF has $1.78 billion in assets, SPDR S&P Bank ETF has $2.11 billion. KBWB has an expense ratio of 0.35% and KBE charges 0.35%.
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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First Trust NASDAQ Bank ETF (FTXO): ETF Research Reports
Wells Fargo & Company (WFC) : Free Stock Analysis Report
KeyCorp (KEY) : Free Stock Analysis Report
Zions Bancorporation, N.A. (ZION) : Free Stock Analysis Report
SPDR S&P Bank ETF (KBE): ETF Research Reports
Invesco KBW Bank ETF (KBWB): ETF Research Reports
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