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Should You Invest in the First Trust NASDAQ Transportation ETF (FTXR)?

Designed to provide broad exposure to the Industrials - Transportation/Shipping segment of the equity market, the First Trust NASDAQ Transportation ETF (FTXR) is a passively managed exchange traded fund launched on 09/20/2016.

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 also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Industrials - Transportation/Shipping is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.

Index Details

The fund is sponsored by First Trust Advisors. It has amassed assets over $667.55 million, making it one of the average sized ETFs attempting to match the performance of the Industrials - Transportation/Shipping segment of the equity market. FTXR 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.

Costs

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 0.55%.

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 Industrials sector--about 58.40% of the portfolio, followed by Consumer Discretionary.

Looking at individual holdings, Tesla, Inc. (TSLA) accounts for about 16.91% of total assets, followed by C.h. Robinson Worldwide, Inc. (CHRW) and Old Dominion Freight Line, Inc. (ODFL).

The top 10 holdings account for about 64.02% of total assets under management.

Performance and Risk

The ETF has added roughly 1.30% so far this year and it's up approximately 12.34% in the last one year (as of 10/12/2020). In that past 52-week period, it has traded between $12.80 and $25.34.

The ETF has a beta of 1.45 and standard deviation of 29.51% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.

Alternatives

First Trust NASDAQ Transportation 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, FTXR is a good option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

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 $1.23 billion in assets, U.S. Global Jets ETF has $1.75 billion. IYT has an expense ratio of 0.42% and JETS charges 0.60%.

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
 
C.H. Robinson Worldwide, Inc. (CHRW): Free Stock Analysis Report
 
Tesla, Inc. (TSLA): Free Stock Analysis Report
 
Old Dominion Freight Line, Inc. (ODFL): 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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