For as popular as smartphones are, the First Trust NASDAQ CEA Smartphone Index Fund (NasdaqGS: FONE) does not get a lot of attention. When it came to market two and a half years ago, not only did FONE enter an arguably already saturated arena of technology sector ETFs, but the fund was also thought to be too much of a niche play.

FONE has proven the naysayers wrong, at least in terms of returns. While the ETF is small with just $8.9 million in assets under management, it has been a solid performer with a 14.2% year-to-date gain. That has FONE within striking distance of taking out price levels not seen since its February 2011 debut. [Smartphone ETF on the Line]

Interestingly, FONE has been a sturdy performer without significant allocations to the “usual suspects of the smartphone business – Apple (NasdaqGM: AAPL), BlackBerrry (NasdaqGM: BBRY), Google (NasdaqGM: GOOG) and Samsung. Of those stocks, only Apple is a top-10 holding in FONE. Combined those stocks represent just about 8% of FONE’s weight. [Earnings Ring Smartphone ETF]

FONE is not a traditional market cap-weighted ETF. Rather, the fund equal weighs its 63 components within the sub-sectors represented in the ETF. The resulting breakdown looks like this: “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,” according to issuer data. 

Semiconductors with smartphone exposure, including Qualcomm (NasdaqGM: QCOM) and Texas Instruments (NasdaqGM: TXN), are FONE’s largest sub-sector weight at 24.1%. While it may seem as though everyone in the U.S. has a smartphone, that is not the case globally, indicating that there FONE may have some fundamental tailwinds to drive future returns.

Qualcomm recently forecast fiscal fourth-quarter revenue of $5.9 billion to $6.6 billion after saying revenue for its most recently completed quarter surged 35% to $6.24 billion due in large part to soaring demand for chips used in smartphones.

Global smartphone penetration was just 31% at the start of this year, but that number is expected to rise to 50% in just four years, according to Standard Digital. Since March 2009, the S&P Global 1200 Telecommunication Services Index has climbed 50%, the publication reported.