Designed to provide broad exposure to the Industrials ETFs category of the market, the First Trust NASDAQ Transportation ETF (FTXR) 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.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
FTXR is managed by First Trust Advisors, and this fund has amassed over $810.85 million, which makes it one of the average sized ETFs in the Industrials ETFs. This particular fund seeks to match the performance of the Nasdaq US Smart Transportation Index before fees and expenses.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.60%.
It's 12-month trailing dividend yield comes in at 1.42%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 67.6% of the portfolio. Consumer Discretionary and Energy round out the top three.
Taking into account individual holdings, General Motors Company (GM) accounts for about 9.34% of the fund's total assets, followed by Tesla, Inc. (TSLA) and Ford Motor Company (F).
FTXR's top 10 holdings account for about 60.32% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ Transportation ETF has added about 6.73% so far, and it's up approximately 35.55% over the last 12 months (as of 03/05/2026). FTXR has traded between $25.70 $43.10 in this past 52-week period.
The fund has a beta of 1.29 and standard deviation of 22.01% for the trailing three-year period. With about 40 holdings, it has more concentrated exposure than peers .
Alternatives
First Trust NASDAQ Transportation ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
U.S. Global Jets ETF (JETS) tracks U.S. Global Jets Index and the iShares U.S. Transportation ETF (IYT) tracks Dow Jones Transportation Average Index. U.S. Global Jets ETF has $760.77 million in assets, iShares U.S. Transportation ETF has $1.22 billion. JETS has an expense ratio of 0.60% and IYT changes 0.38%.
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 ReportsThis article originally published on Zacks Investment Research (zacks.com).
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