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Will FTXL Outshine Other Tech ETFs? (Full content of article is considered to ensure rewritten title accurately reflects its message)

HomeWill FTXL Outshine Other Tech ETFs? (Full content of article is considered to ensure rewritten title accurately reflects its message)

Will FTXL Outshine Other Tech ETFs? (Full content of article is considered to ensure rewritten title accurately reflects its message)

Will FTXL Outshine Other Tech ETFs? (Full content of article is considered to ensure rewritten title accurately reflects its message)

Summary

The First Trust NASDAQ Semiconductor ETF (FTXL) is a smart beta exchange traded fund designed to provide broad exposure to the Technology ETFs category of the market. Launched in 2016, FTXL has amassed over $296.94 million in assets and seeks to match the performance of the Nasdaq US Smart Semiconductor Index. This index is a modified factor weighted index that provides exposure to US companies within the semiconductor industry.

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. Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns. However, 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.

Smart beta ETFs are designed to provide exposure to a particular sector or segment of the market by selecting stocks based on certain fundamental characteristics, or a combination of such. These characteristics can include factors such as volatility, momentum, and dividend yield. While this space provides many choices to investors, not all have been able to deliver first-rate results.

Fund Sponsor & Index

FTXL is managed by First Trust Advisors and seeks to match the performance of the Nasdaq US Smart Semiconductor Index. This index is designed to provide exposure to US companies within the semiconductor industry. The fund has amassed over $296.94 million in assets, making it one of the average sized ETFs in the Technology ETFs category.

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%. This indicates that the fund has been paying out a significant portion of its income to shareholders over the past year.

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).

FTXL'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. This indicates that the fund is more volatile than the broader market, but still offers a relatively stable return profile.

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, while VanEck Semiconductor ETF has $27.74 billion.

Bottom Line

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 segment. By selecting a fund with a lower expense ratio and higher dividend yield, investors can potentially reduce their costs and increase their returns over time.

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.