Designed to provide broad exposure to the Financials - Banking segment of the U.S. equity market, the First Trust Nasdaq Bank ETF (FTXO) is a passively managed exchange traded fund launched on 09/20/2016.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Banking is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.30 B, making it one of the average sized ETFs attempting to match the performance of the Financials - Banking segment of the U.S. 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.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.60%, making it the most expensive product in the space.
It has a 12-month trailing dividend yield of 1.37%.
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 Financials sector--about 100% of the portfolio.
Looking at individual holdings, Fifth Third Bancorp (FITB) accounts for about 8.07% of total assets, followed by Regions Financial Corporation (RF) and Jpmorgan Chase & Co. (JPM).
The top 10 holdings account for about 59.99% of total assets under management.
Performance and Risk
So far this year, FTXO has added about 0.37%, and is up about 19.46% in the last one year (as of 04/20/2018). During this past 52-week period, the fund has traded between $24.70 and $32.18.
The ETF has a beta of 1.64 and standard deviation of 19.88% for the trailing three-year period. With about 30 holdings, it has more concentrated exposure than peers.
First Trust Nasdaq Bank 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, FTXO is a good option for those seeking exposure to the Financials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
PowerShares KBW Bank Portfolio (KBWB) tracks KBW Nasdaq Bank index and the SPDR S&P Bank ETF (KBE) tracks S&P Banks Select Industry Index. PowerShares KBW Bank Portfolio has $1.16 B in assets, SPDR S&P Bank ETF has $4.09 B. KBWB has an expense ratio of 0.35% and KBE charges 0.35%.
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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JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report
Fifth Third Bancorp (FITB) : Free Stock Analysis Report
Regions Financial Corporation (RF) : Free Stock Analysis Report
SPDR-KBW BANK (KBE): ETF Research Reports
FT-NDQ BANK (FTXO): ETF Research Reports
PWRSH-KBW BP (KBWB): ETF Research Reports
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