Trend: Smartphones and related technology continue a global rise in popularity, outselling computers and creating a new industry led by Apple.
First Trust introduced a new ETF on February 17, 2011, targeting the rapidly growing global smart phone industry. The First Trust NASDAQ CEA Smart phone Index Fund (FONE) includes stocks of companies primarily involved in design, fabrication and distribution of handsets, along with hardware, software and mobile networks associated with the development, sale, and usage of the devices.
The NASDAQ OMX CEA Smart phone Index is a modified equal dollar weighted index with 45% allocated to handsets, 45% allocated to software applications and hardware components, and 10% allocated to network providers.
Stocks within each business segment are equal-weighted, so the fund’s largest holdings at any time will typically be from the 45% business segment with the fewest number of stocks. The detailed holdings data indicates the largest positions are from the handset segment, with each of those 17 stocks receiving a nominal 2.6% weighting at the last rebalancing. The hardware/software segment has about 39 stocks with a nominal weighting of 1.1% each, and the network provider segment has about 17 stocks with a nominal weighting of 0.6% each. Individual stock weightings will vary by their performance between the quarterly rebalancings.
Industry level representation includes semiconductors and semiconductor equipment (25.2%), communications equipment (23.3%), electronic equipment instruments and components (17.8%), computers and peripherals (11.1%), wireless telecommunication services (7.6%), household durables (5.3%), diversified telecommunication services (5.0%), and others (5.0%).
FONE is a global fund with country weightings in the United States (43.9%), Taiwan (11.5%), Japan (9.2%), South Korea (6.1%), Canada (5.2%), Singapore (3.8%), Hong Kong (3.7%), France (3.4%), Finland (2.6%), China (2.0%), and Others (8.5%).
Overall, FONE looks like a very diversified vehicle for investors to capture potential growth in the global smart phone industry. It has an expense ratio of 0.70%, and additional information is provided in the summary page, fact sheet, Users Guide, and prospectus.