Is First Trust NASDAQ Semiconductor ETF (FTXL) a Strong ETF Right Now?

Designed to provide broad exposure to the Technology ETFs category of the market, the First Trust NASDAQ Semiconductor ETF (FTXL) is a smart beta exchange traded fund launched on 09/20/2016.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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

FTXL is managed by First Trust Advisors, and this fund has amassed over $296.94 million, which makes it one of the average sized ETFs in the Technology ETFs. Before fees and expenses, FTXL 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.

FTXL's 12-month trailing dividend yield is 0.44%.

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.

When you look at individual holdings, Broadcom Inc. (AVGO) accounts for about 9.19% of the fund's total assets, followed by Micron Technology, Inc. (MU) and Nvidia Corporation (NVDA).

Story ContinuesFTXL's top 10 holdings account for about 62.83% of its total assets under management.

Performance and Risk

The ETF has added about 13.89% so far this year and is down about -0.66% in the last one year (as of 07/21/2025). In the past 52-week period, it has traded between $62.37 and $101.42

The ETF has a beta of 1.34 and standard deviation of 35.50% for the trailing three-year period. With about 31 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 $13.95 billion in assets, VanEck Semiconductor ETF has $27.74 billion. SOXX has an expense ratio of 0.35% 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.

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

First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports

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

Zacks Investment Research

View Comments