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Should You Invest in the First Trust Indxx NextG ETF (NXTG)?

If you're interested in broad exposure to the Technology - Telecom segment of the equity market, look no further than the First Trust Indxx NextG ETF (NXTG), a passively managed exchange traded fund launched on 02/17/2011.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Telecom is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $600.57 million, making it one of the larger ETFs attempting to match the performance of the Technology - Telecom segment of the equity market. NXTG seeks to match the performance of the INDXX 5G & NEXTG THEMATIC INDEX before fees and expenses.

The Indxx 5G & NextG Thematic Index tracks the performance of companies engaged in the smartphone segment of the telecom and technology sectors.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.70%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 2.62%.

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.

Looking at individual holdings, Advanced Micro Devices, Inc. (AMD) accounts for about 2.33% of total assets, followed by Amdocs Limited (DOX) and Hewlett Packard Enterprise Company (HPE).

The top 10 holdings account for about 14.87% of total assets under management.

Performance and Risk

The ETF has lost about -22.89% and is down about -13.83% so far this year and in the past one year (as of 06/20/2022), respectively. NXTG has traded between $63.81 and $83.17 during this last 52-week period.

The ETF has a beta of 0.82 and standard deviation of 23.03% for the trailing three-year period. With about 99 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Indxx NextG ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, NXTG is a good option for those seeking exposure to the Technology ETFs area of the market. Investors might also want to consider some other ETF options in the space.




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First Trust Indxx NextG ETF (NXTG): ETF Research Reports
 
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
 
Amdocs Limited (DOX): Free Stock Analysis Report
 
Hewlett Packard Enterprise Company (HPE): Free Stock Analysis Report
 
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