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?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

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

Because the fund has amassed over $1.45 billion, this makes it one of the larger ETFs in the Technology ETFs. FTXL is managed by First Trust Advisors. This particular fund seeks to match the performance of the Nasdaq US Smart Semiconductor Index before fees and expenses.

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

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 FTXL are 0.60%, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 0.50%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 100% of the portfolio, the fund has heaviest allocation to the Information Technology sector.

Taking into account individual holdings, Intel Corporation (INTC) accounts for about 8.42% of the fund's total assets, followed by Broadcom Inc. (AVGO) and Applied Materials, Inc. (AMAT).