ETF Expert

First Trust Advisors has more than 30 exchange-traded vehicles in the U.S. Neither the sector funds nor the style funds, most of which track AlphaDEX indexes, have been able to garner significant investor interest.

Yet don't write off First Trust altogether. Not only do they have every intention of participating in the ETF revolution, they may finally be starting to hit their stride.

First Trust Revere Natural Gas (FCG) is the go-to natural gas company ETF with approx $70 million in assets. Other natural gas ETFs/ETNs deal with the commodity itself. Meanwhile, First Trust Global Wind Energy (FAN) boasts $90 million in assets and has the distinction of being the "first" wind ETF.

Even if First Trust has not been able to put together a blockbuster vehicle with more than $100 million in assets so far, there appears to be hope on the horizon. In particular, First Trust is serving up a community bank fund for the financial sector… one that is clearly distinguishable from so-called "regional banking."

The First Trust Nasdaq ABA Community Bank Fund (QABA) is expected to launch on July 1. And indeed, this one may provide something that's relatively stable in a financial segment that's anything but sanguine.

Keep in mind, the U.S. already has the streetTracks KBW Bank Fund (KBE), stuffed with mega-banks like B of A and Chase. Then there's the street-Tracks KBW Regional Bank Fund (KRE), chock-filled with regional giants like Hudson City and City National.

What First Trust Nasdaq ABA Community Bank Fund (QABA) is attempting to bring to the table are true blue, low-risk "locals." The upside performance would be steadier and somewhat limited, but the downside volatility would be kept in check by the conservative nature of local enterprises.

What may make QABA even more attractive is its ability to weed out trouble-makers from the get-go. In the paperwork that First Trust recently filed with the SEC, none of the 50 largest banks are permitted for inclusion. What's more, any bank that has been categorized as having "credit-card specialization" would be excluded from the index. (In other words, if another shoe in the credit crisis drops, community banks in this index will be reasonably insulated.)

There are 8000 community banks in the country. Many of them provide dividends. And many of them always adhered to rigid lending criteria. It follows that First Trust Nasdaq ABA Community Bank Fund (QABA) may give First Trust the blockbuster ETF it craves.

If you'd like to learn more about ETF investing… then tune into "In the Money With Gary Gordon." You can listen to the show "LIVE", via podcast or on your iPod.

Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.