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Is First Trust Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
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Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) provides investors broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
FTC is managed by First Trust Advisors, and this fund has amassed over $1.32 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index.
The NASDAQ AlphaDEX Large Cap Growth Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Growth Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
FTC's 12-month trailing dividend yield is 0%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FTC, it has heaviest allocation in the Information Technology sector --about 32.50% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.
When you look at individual holdings, Cloudflare, Inc. (class A) (NET - Free Report) accounts for about 1.37% of the fund's total assets, followed by Hubspot, Inc. (HUBS - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) .
The top 10 holdings account for about 10.04% of total assets under management.
Performance and Risk
The ETF has added about 26.22% so far this year and it's up approximately 45.95% in the last one year (as of 11/02/2021). In the past 52-week period, it has traded between $84.95 and $120.31.
The fund has a beta of 1.02 and standard deviation of 24.90% for the trailing three-year period, which makes FTC a medium risk choice in this particular space. With about 188 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $88.25 billion in assets, Invesco QQQ has $202.10 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is First Trust Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) provides investors broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
FTC is managed by First Trust Advisors, and this fund has amassed over $1.32 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index.
The NASDAQ AlphaDEX Large Cap Growth Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Growth Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
FTC's 12-month trailing dividend yield is 0%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FTC, it has heaviest allocation in the Information Technology sector --about 32.50% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.
When you look at individual holdings, Cloudflare, Inc. (class A) (NET - Free Report) accounts for about 1.37% of the fund's total assets, followed by Hubspot, Inc. (HUBS - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) .
The top 10 holdings account for about 10.04% of total assets under management.
Performance and Risk
The ETF has added about 26.22% so far this year and it's up approximately 45.95% in the last one year (as of 11/02/2021). In the past 52-week period, it has traded between $84.95 and $120.31.
The fund has a beta of 1.02 and standard deviation of 24.90% for the trailing three-year period, which makes FTC a medium risk choice in this particular space. With about 188 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $88.25 billion in assets, Invesco QQQ has $202.10 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.