The First Trust NASDAQ Semiconductor ETF (FTXL) made its debut on 09/20/2016, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.35 billion, making it one of the larger ETFs in the Technology ETFs. FTXL, before fees and expenses, 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.60% for FTXL, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.07%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 100% of the portfolio.
Looking at individual holdings, Micron Technology, Inc. (MU) accounts for about 13.37% of total assets, followed by Intel Corporation (INTC) and Marvell Technology, Inc. (MRVL).
FTXL's top 10 holdings account for about 68.39% of its total assets under management.
Performance and Risk
The ETF has added roughly 91.89% so far this year and is up about 110.49% in the last one year (as of 10/12/2026). In the past 52-week period, it has traded between $111.76 and $297.05
The fund has a beta of 1.75 and standard deviation of 39.88% for the trailing three-year period. With about 35 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 $46.17 billion in assets, VanEck Semiconductor ETF has $74.16 billion. SOXX has an expense ratio of 0.33% 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
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First Trust NASDAQ Semiconductor ETF (FTXL): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).