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

Designed to provide broad exposure to the Financials ETFs category of the market, the First Trust NASDAQ Bank ETF (FTXO) is a smart beta exchange traded fund launched on 09/20/2016.What Are Smart Beta ETFs?Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.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.This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.Fund Sponsor & IndexBecause the fund has amassed over $298.81 million, this makes it one of the average sized ETFs in the Financials ETFs. FTXO is managed by First Trust Advisors. FTXO, before fees and expenses, 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 ExpensesSince 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 this ETF, which makes it on par with most peer products in the space.It's 12-month trailing dividend yield comes in at 1.67%.Sector Exposure and Top HoldingsETFs offer 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.FTXO's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.When you look at individual holdings, Citigroup Inc. (C) accounts for about 8.41% of the fund's total assets, followed by Wells Fargo & Company (WFC) and Bank Of America Corporation (BAC).Its top 10 holdings account for approximately 58.57% of FTXO's total assets under management.Performance and RiskSo far this year, FTXO has gained about 7.37%, and is up about 33.87% in the last one year (as of 06/18/2026). During this past 52-week period, the fund has traded between $31.27 and $41.45.FTXO has a beta of 0.90 and standard deviation of 24.20% for the trailing three-year period. With about 51 holdings, it effectively diversifies company-specific risk .AlternativesFirst Trust NASDAQ Bank ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.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 $1.48 billion in assets, Invesco KBW Bank ETF has $6.13 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.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 >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks