A smart beta exchange traded fund, the First Trust NASDAQ Semiconductor ETF (FTXL) debuted on 09/20/2016, and offers broad exposure to the Technology ETFs category of the market.
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.
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.
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 managed by First Trust Advisors, and has been able to amass over $1.58 billion, which makes it one of the larger ETFs in the Technology ETFs. FTXL, before fees and expenses, seeks to match the performance of the Nasdaq US Smart Semiconductor Index.
The Nasdaq US Smart Semiconductor Index is a modified factor weighted index, designed to provide exposure to US companies within the semiconductor industry.
Cost & Other Expenses
Since 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.
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 0.24%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
FTXL's heaviest allocation is in the Information Technology sector, which is about 100% of the portfolio.
Looking at individual holdings, Micron Technology, Inc. (MU) accounts for about 15.12% of total assets, followed by Intel Corporation (INTC) and Broadcom Inc. (AVGO).
Its top 10 holdings account for approximately 66.16% of FTXL's total assets under management.
Performance and Risk
So far this year, FTXL has added roughly 18.34%, and was up about 78.13% in the last one year (as of 01/28/2026). During this past 52-week period, the fund has traded between $62.37 and $154.30.
FTXL has a beta of 1.41 and standard deviation of 33.97% for the trailing three-year period. With about 32 holdings, it has more concentrated exposure than peers .
Alternatives
First Trust NASDAQ Semiconductor ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
iShares Semiconductor ETF (SOXX) tracks PHLX SOX Semiconductor Sector Index and the VanEck Semiconductor ETF (SMH) tracks MVIS US Listed Semiconductor 25 Index. iShares Semiconductor ETF has $20.86 billion in assets, VanEck Semiconductor ETF has $44.14 billion. SOXX has an expense ratio of 0.34% and SMH 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 Technology 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 Semiconductor ETF (FTXL): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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