The First Trust NASDAQ Pharmaceuticals ETF (FTXH) was launched on 09/20/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Health Care ETFs category of the market.
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $920.18 million, which makes it one of the larger ETFs in the Health Care ETFs. FTXH, before fees and expenses, seeks to match the performance of the Nasdaq US Smart Pharmaceuticals Index.
The Nasdaq US Smart Pharmaceuticals Index is a modified factor weighted index, designed to provide exposure to US companies within the pharmaceuticals industry.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.60%.
It's 12-month trailing dividend yield comes in at 1.08%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
FTXH's heaviest allocation is in the Healthcare sector, which is about 100% of the portfolio.
Taking into account individual holdings, Eli Lilly And Company (LLY) accounts for about 7.73% of the fund's total assets, followed by Abbvie Inc. (ABBV) and Johnson & Johnson (JNJ).
FTXH's top 10 holdings account for about 52.28% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust NASDAQ Pharmaceuticals ETF has added about 20.07% so far, and is up about 50.19% over the last 12 months (as of 08/06/2026). FTXH has traded between $26.16 $39.69 in this past 52-week period.
FTXH has a beta of 0.45 and standard deviation of 16.49% for the trailing three-year period. With about 51 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust NASDAQ Pharmaceuticals ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
VanEck Pharmaceutical ETF (PPH) tracks MVIS US Listed Pharmaceutical 25 Index and the iShares U.S. Pharmaceuticals ETF (IHE) tracks Dow Jones U.S. Select Pharmaceuticals Index. VanEck Pharmaceutical ETF has $919.04 million in assets, iShares U.S. Pharmaceuticals ETF has $1.66 billion. PPH has an expense ratio of 0.36% and IHE changes 0.38%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care ETFs
Bottom Line
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, please visit Zacks ETF Center.
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First Trust NASDAQ Pharmaceuticals ETF (FTXH): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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