A new ETF began trading on NASDAQ on Friday based on an index that tracks smart phone companies. The First Trust NASDAQ CEA Smartphone Index Fund trades under the ticker FONE.
"The smart phone industry has enormous growth and has the potential to grow for years and years to come," Ryan Issakainen, an ETF strategist at First Trust, told AdvisorOne. "The fund is good for investors interested in growth and avoiding the vast difficulties in picking a specific stock."
"We designed a fund with low costs that is transparent, liquid and tax efficient. The strategy makes sense for a long time and the smart phone industry has a long way to go," Issakainen added.
The fund is allocated between handsets, hardware and software applications, and network providers, according to Issakainen. Forty-five percent of the fund goes to handset makers like Apple, Research in Motion and Nokia, while 45% is allocated to companies that make software and equipment. Those allocations are spread evenly between 45 holdings, Issakainen said. The remaining 10% of holdings go to network providers globally, including Vodafone, Deutsche Telekom and China Mobile.