Is First Trust NASDAQ Transportation ETF (FTXR) a Strong ETF Right Now?
Smart Beta ETF report for FTXR
The First Trust NASDAQ Transportation ETF (FTXR) made its debut on 09/20/2016, and is a smart beta exchange traded fund that provides broad exposure to the Industrials 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
FTXR is managed by First Trust Advisors, and this fund has amassed over $1.11 billion, which makes it one of the average sized ETFs in the Industrials ETFs. This particular fund seeks to match the performance of the Nasdaq US Smart Transportation Index before fees and expenses.
The Nasdaq US Smart Transportation Index is a modified factor weighted index, designed to provide exposure to US companies within the transportation industry.
Cost & Other Expenses
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.
Operating expenses on an annual basis are 0.60% for FTXR, making it on par with most peer products in the space.
FTXR's 12-month trailing dividend yield is 0.38%.
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.
For FTXR, it has heaviest allocation in the Industrials sector --about 81.60% of the portfolio --while Consumer Discretionary and Energy round out the top three.
Taking into account individual holdings, Expeditors International Of Washington, Inc. (EXPD) accounts for about 8.48% of the fund's total assets, followed by Blink Charging Co. (BLNK) and Csx Corporation (CSX).
FTXR's top 10 holdings account for about 56.7% of its total assets under management.
Performance and Risk
The ETF return is roughly 14.73% so far this year and was up about 38.39% in the last one year (as of 09/24/2021). In the past 52-week period, it has traded between $23.23 and $35.12.
FTXR has a beta of 1.41 and standard deviation of 30.42% for the trailing three-year period. With about 30 holdings, it has more concentrated exposure than peers.
First Trust NASDAQ Transportation ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
IShares U.S. Transportation ETF (IYT) tracks Dow Jones Transportation Average Index and the U.S. Global Jets ETF (JETS) tracks U.S. Global Jets Index. IShares U.S. Transportation ETF has $1.49 billion in assets, U.S. Global Jets ETF has $3.53 billion. IYT has an expense ratio of 0.42% and JETS charges 0.60%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
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 Transportation ETF (FTXR): ETF Research Reports
CSX Corporation (CSX): Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD): Free Stock Analysis Report
iShares U.S. Transportation ETF (IYT): ETF Research Reports
U.S. Global Jets ETF (JETS): ETF Research Reports
Blink Charging Co. (BLNK): Get Free Report
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