Should You Invest in the First Trust NASDAQ Bank ETF (FTXO)?

Launched on September 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.Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 1, placing it in top 6%.Index DetailsThe fund is sponsored by First Trust Advisors. It has amassed assets over $254 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.CostsInvestors 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 0.6%, making it on par with most peer products in the space.It has a 12-month trailing dividend yield of 1.92%.Sector Exposure and Top HoldingsETFs 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 8.54% of total assets, followed by Citigroup Inc. (C) and Bank Of America Corporation (BAC).The top 10 holdings account for about 59.64% of total assets under management.Performance and RiskThe ETF has added about 13.55% and it's up approximately 3.31% so far this year and in the past one year (as of 11/27/2025), respectively. FTXO has traded between $25.916 and $36.567 during this last 52-week period.The ETF has a beta of 1.01 and standard deviation of 26.61% for the trailing three-year period. With about 51 holdings, it effectively diversifies company-specific risk.AlternativesFirst 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 sufficient 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.State Street 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. State Street SPDR S&P Bank ETF has $1.38 billion in assets, Invesco KBW Bank ETF has $5.67 billion. KBE has an expense ratio of 0.35%, and KBWB charges 0.35%.Bottom 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.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>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