Is First Trust NASDAQ Transportation ETF (FTXR) a Strong ETF Right Now?
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 long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.19 billion, making it one of the average sized ETFs in the Industrials ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq US Smart Transportation Index.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
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 has a 12-month trailing dividend yield of 0.17%.
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.
This ETF has heaviest allocation in the Industrials sector - about 74.90% of the portfolio. Consumer Discretionary and Energy round out the top three.
Taking into account individual holdings, Expeditors International Of Washington, Inc. (EXPD) accounts for about 8.90% of the fund's total assets, followed by C.h. Robinson Worldwide, Inc. (CHRW) and Paccar Inc (PCAR).
Its top 10 holdings account for approximately 59.41% of FTXR's total assets under management.
Performance and Risk
The ETF has gained about 25.01% and is up about 77.95% so far this year and in the past one year (as of 06/15/2021), respectively. FTXR has traded between $18.39 and $35.12 during this last 52-week period.
The fund has a beta of 1.42 and standard deviation of 30.34% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
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 Transportation Average ETF (IYT) tracks Dow Jones Transportation Average Index and the U.S. Global Jets ETF (JETS) tracks U.S. Global Jets Index. IShares Transportation Average ETF has $1.98 billion in assets, U.S. Global Jets ETF has $4.48 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.
Bottom Line
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
PACCAR Inc. (PCAR) : Free Stock Analysis Report
C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
iShares Transportation Average ETF (IYT): ETF Research Reports
U.S. Global Jets ETF (JETS): ETF Research Reports
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