First Trust ETFs collectively have over $100 billion in assets. Here we’ll check out some popular First Trust ETFs for narrow tech industries.
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Introduction – First Trust ETFs
While the website for First Trust may look antiquated, its ETFs are not. The most popular First Trust ETFs are focused on sub-sectors of technology, and the new Communications sector.
Since these sectors are broad, some investors prefer to focus on specific tech industries via the following funds.
FDN – First Trust Dow Jones Internet Index Fund
FDN seeks to track the Dow Jones Internet Composite Index, 40 of the largest companies in the U.S. related to internet commerce and internet services. Notable examples include Amazon, Facebook, Netflix, Salesforce, Twitter, Cisco, eBay, Pinterest, DocuSign, Etsy, Wayfair, Dropbox, and more. FDN has outperformed the NASDAQ-100, the S&P 500, and the Technology sector since its inception in 2006. The fund has over $10 billion in assets and an expense ratio of 0.52%.
SKYY – First Trust ISE Cloud Computing Index Fund
SKYY targets the narrow cloud computing market segment. Companies are close to equally weighted within the fund, with a cap of a 4.5% weight, to prevent concentration. The fund’s index from First Trust takes stocks that can be classified as Infrastructure as a Service (IaaS), Platform as a Service (PaaS), or Software as a Service (SaaS), and then applies additional size, liquidity, and tradability screens. Notable names in this fund include Amazon, MongoDB, Oracle, Alphabet (Google), Cisco, Adobe, etc. This ETF has an expense ratio of 0.60%
CIBR – First Trust NASDAQ Cybersecurity ETF
CIBR seeks to track the Nasdaq CTA Cybersecurity Index, composed of companies engaged in the cybersecurity segment of the technology and industrials sectors. CIBR has significant small- and mid-cap exposure, and companies are weighted within the fund by liquidity. The fund has over $3 billion in assets and an expense ratio of 0.60%.
QTEC – First Trust NASDAQ-100-Technology Sector Index Fund
QTEC only holds large-cap Technology stocks listed on the NASDAQ. Investors like QTEC for its equal weighting of companies within the fund. QTEC is almost entirely software, IT, and semiconductors. As such, QTEC is suitable for a tactical tilt but is likely not ideal for a long-term hold. The fund has over $3 billion in assets and an expense ratio of 0.57%.
FXL – First Trust Technology AlphaDEX® Fund
FXL employs First Trust’s AlphaDEX® methodology on the Russell 1000 Index by ranking stocks on a variety of growth and value factors including momentum, Return on Equity, book value, and more. Basically, the complex methodology aims to identify companies with strong fundamentals that are expected to outperform the market. The fund has over $2 billion in assets and an expense ratio of 0.61%.
Where To Buy These First Trust ETFs
All the above First Trust ETFs should be available at any major broker. My choice is M1 Finance. The broker has zero trade commissions and zero account fees, and offers fractional shares, dynamic rebalancing, intuitive pie visualization, and a sleek, user-friendly interface and mobile app. I wrote a comprehensive review of M1 Finance here.
Disclaimer: While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.
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