Is First Trust NASDAQ Bank ETF (FTXO) a Strong ETF Right Now?

Launched on 09/20/2016, the First Trust NASDAQ Bank ETF (FTXO) is a smart beta exchange traded fund offering broad exposure to the Financials ETFs category of the market.What Are Smart Beta ETFs?Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.Fund Sponsor & IndexBecause the fund has amassed over $237.9 million, this makes it one of the average sized ETFs in the Financials ETFs. FTXO is managed by First Trust Advisors. Before fees and expenses, FTXO seeks to match the performance of the Nasdaq US Smart Banks Index.The Nasdaq US Smart Banks Index is a modified factor weighted index, designed to provide exposure to US companies within the banking industry.Cost & Other ExpensesCost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.FTXO's 12-month trailing dividend yield is 2.00%.Sector Exposure and Top HoldingsIt 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 FTXO, it has heaviest allocation in the Financials sector --about 100% of the portfolio.When you look at individual holdings, Jpmorgan Chase & Co. (JPM) accounts for about 8.42% of the fund's total assets, followed by Citigroup Inc. (C) and Wells Fargo & Company (WFC).The top 10 holdings account for about 59.72% of total assets under management.Performance and RiskThe ETF has added roughly 10.05% so far this year and is up about 21.43% in the last one year (as of 07/25/2025). In the past 52-week period, it has traded between $25.92 and $35.28FTXO has a beta of 0.94 and standard deviation of 27.41% for the trailing three-year period. With about 51 holdings, it effectively diversifies company-specific risk .AlternativesFirst Trust NASDAQ Bank ETF is an excellent option for investors seeking to outperform the Financials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.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 $1.58 billion in assets, Invesco KBW Bank ETF has $4.86 billion. KBE has an expense ratio of 0.35% and KBWB changes 0.35%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials ETFsBottom LineTo 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.Want key ETF info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report First Trust NASDAQ Bank ETF (FTXO): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks