First Trust, the exchange-traded fund company known for its
successful natural gas drillers fund, today rolled out its
so-called smart phone ETF that's focused on technology companies
specializing in devices like iPhones or BlackBerrys.
The First Trust Nasdaq CEA Smartphone Index Fund (Nasdaq:FONE)
tracks the Nasdaq OMX CEA Smartphone Index, a benchmark focused on
information technology and telecommunications. FONE will come with
a 0.70 percent annual expense ratio, according to a regulatory
filing the Wheaton, Ill.-based company made on Feb. 15.
The benchmark includes companies involved in everything from
hardware manufacturing to operating systems, to software and
service names associated with the development, sales and use of
The popularity of wireless devices is unquestionable, as
advertising campaigns that fill the airwaves announcing new and
improved phones clearly demonstrate. But it isn't as clear that
FONE will find a solid footing among tech-savvy investors who
already have two ETFs with which to express their views
The SPDR S&P International Technology Sector ETF
(NYSEArca:IPK) and the SPDR S&P International
Telecommunications Sector ETF (NYSEArca:IST) had assets of $27.7
million and $11.7 million, respectively, as of Feb. 16, according
to data compiled by IndexUniverse.com. They are also less expensive
than FONE-both with expense ratios of 0.50 percent.
First Trust isn't new to novelty ETFs. The company's lineup of
about 44 funds includes eight specialty ETFs that zoom in on niches
ranging from IPOs to water. Most of these narrowly focused ETFs
have well under $100 million in assets.
Still, the company has grown to manage more than $6 billion of
assets in all its ETFs since it launched its first fund in 2005.
Its most successful fund, the First Trust ISE-Revere Natural Gas
Index Fund (NYSEArca:FCG), has gathered about $436 million in
assets since its 2007 inception.
FONE's benchmark is a modified equal-dollar-weighted index
comprising some 80 securities, according to its recent filing with
the Securities and Exchange Commission.
About 45 percent of the portfolio is allocated to "handset"
companies that manufacture the equipment; 45 percent to "software
applications/hardware components," and the final 10 percent to
wireless network "providers," the filing said.
Its holdings must be publicly listed names classified as smart
phone companies, have a minimum float-adjusted global market
capitalization of $250 million, and a minimum three-month average
daily trading volume of $1 million.
Don't forget to check IndexUniverse.com's ETF Data
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