Should You Invest in the First Trust NASDAQ Semiconductor ETF (FTXL)?

Launched on 09/20/2016, the First Trust NASDAQ Semiconductor ETF (FTXL) is a passively managed exchange traded fund designed to provide a broad exposure to the Technology - Semiconductors segment of the equity market.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Semiconductors is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 8, placing it in top 50%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $232.49 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Semiconductors segment of the equity market. FTXL seeks to match the performance of the Nasdaq US Smart Semiconductor Index before fees and expenses.

The Nasdaq US Smart Semiconductor Index is a modified factor weighted index, designed to provide exposure to US companies within the semiconductor industry.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 0.56%.

Sector Exposure and Top Holdings

ETFs 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 Information Technology sector--about 100% of the portfolio.

Looking at individual holdings, Qualcomm Incorporated (QCOM) accounts for about 8.44% of total assets, followed by Micron Technology, Inc. (MU) and Applied Materials, Inc. (AMAT).

The top 10 holdings account for about 60.69% of total assets under management.

Performance and Risk

The ETF has lost about -13.15% and is down about -12.52% so far this year and in the past one year (as of 05/06/2025), respectively. FTXL has traded between $62.37 and $107.11 during this last 52-week period.

The ETF has a beta of 1.31 and standard deviation of 36.59% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.

Alternatives

First Trust NASDAQ Semiconductor ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FTXL is a great option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that 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 $11.08 billion in assets, VanEck Semiconductor ETF has $19.81 billion. SOXX has an expense ratio of 0.35% and SMH charges 0.35%.

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.

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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research