Checking In: Ringing Up The Smartphone ETF

To say the First Trust NASDAQ CEA Smartphone Index Fund

was ballyhooed even before its debut would be a fair assessment. Mobile phone users are all about smartphones these days, whether it's the iPhone, Blackberry or some other varietal, smartphones are where it's at in the mobile phone market. So it was probably just a matter of time before we saw a smartphone-specific ETF and First Trust was there to oblige tech-crazy ETF investors with FONE, which made its debut on Feb. 17. So while FONE is still in its infancy, the popularity of the sector that it tracks means we probably ought to at least check in with this ETF. In its six-week lifespan, FONE has done an admirable job of attracting assets with a haul of almost $14 million in assets under management. That's better than $2 million a week and while that pace could eventually slow, it's safe to say FONE is at least off to solid start. The 30-day volume average isn't bad either at just over 29,000 shares a day, according to First Trust data. FONE has a story to tell and it's one investors should avail themselves off before purchasing the ETF. This isn't a knock, it's merely statement of fact: If you're expecting an ETF that is overweight Apple

, look elsewhere. FONE holds 73 stocks and none get a weight above 2.82%. In fact, Apple is merely the third-largest holding as of March 28 and Research in Motion

isn't found among the top-10 holdings. Nor is Google

. Remember this about the index FONE tracks and this is straight from First Trust's Web site: 45% of the index weight is allocated to Handsets, 45% of the index weight is allocated to Software Applications and Hardware Components, and 10% of the index weight is allocated to Network Providers. Again, not a knock, we're just mentioning the facts. If there was a knock on FONE it would be the 0.7% expense ratio, but that could come down as FONE matures and acquires more AUM. Before the ETF debuted, the idea behind FONE may have been cute at best, but the fund has adopted to life in the real world quite well and while that's a buy recommendation, FONE is one of the ETFs introduced this year that investors ought to keep an eye on from time to time.