ETFFirst Trust today (2/18/11) introduced a new ETF targeting the rapidly growing global smartphone industry. First Trust NASDAQ CEA Smartphone 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 development, sale, and usage of the devices.

The Consumer Electronics Association, the CEA part of the fund’s name, is responsible for identifying the companies engaged in the smartphone industry. A smartphone is classified as “a wireless, mobile communication device offering advanced capabilities and functionalities, including web access, through the use of an identifiable operating system.”

The NASDAQ OMX CEA Smartphone 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 & Semiconductor Equipment 25.2%, Communications Equipment 23.3%, Electronic Equipment Instruments & Components 17.8%, Computers & 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 of 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 smartphone industry. It has an expense ratio of 0.70%, and additional information is provided in the summary page, fact sheet, Users Guide, and prospectus.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.