Should You Invest in the First Trust NASDAQ Bank ETF (FTXO)?
Sector ETF report for FTXO
Launched on 09/20/2016, the First Trust NASDAQ Bank ETF (FTXO) is a passively managed exchange traded fund designed to provide a 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.
Investor-friendly, sector ETFs provide many options 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 2, placing it in top 13%.
The fund is sponsored by First Trust Advisors. It has amassed assets over $295.12 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.
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.
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 1.53%.
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, New York Community Bancorp, Inc. (NYCB) accounts for about 8.24% of total assets, followed by The Pnc Financial Services Group, Inc. (PNC) and Popular, Inc. (BPOP).
The top 10 holdings account for about 58.96% of total assets under management.
Performance and Risk
The ETF has added about 48.05% so far this year and is up about 87.88% in the last one year (as of 11/02/2021). In that past 52-week period, it has traded between $18.53 and $35.32.
The ETF has a beta of 1.36 and standard deviation of 38.93% 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 reasonable 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.
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. SPDR S&P Bank ETF has $3.59 billion in assets, Invesco KBW Bank ETF has $3.60 billion. KBE has an expense ratio of 0.35% and KBWB 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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First Trust NASDAQ Bank ETF (FTXO): ETF Research Reports
The PNC Financial Services Group, Inc (PNC): Free Stock Analysis Report
Popular, Inc. (BPOP): Free Stock Analysis Report
New York Community Bancorp, Inc. (NYCB): 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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