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Is First Trust Large Cap Value AlphaDEX ETF (FTA) a Strong ETF Right Now?
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Launched on 05/08/2007, the First Trust Large Cap Value AlphaDEX ETF (FTA - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by First Trust Advisors, FTA has amassed assets over $1.17 billion, making it one of the average sized ETFs in the Style Box - Large Cap Value. FTA seeks to match the performance of the Nasdaq AlphaDEX Large Cap Value Index before fees and expenses.
The NASDAQ AlphaDEX Large Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Value Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.59%, making it one of the more expensive products in the space.
FTA's 12-month trailing dividend yield is 2.17%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FTA, it has heaviest allocation in the Financials sector --about 26.40% of the portfolio --while Industrials and Utilities round out the top three.
Looking at individual holdings, Marathon Petroleum Corporation (MPC - Free Report) accounts for about 1.14% of total assets, followed by Keycorp (KEY - Free Report) and Ovintiv Inc. (OVV - Free Report) .
The top 10 holdings account for about 10.62% of total assets under management.
Performance and Risk
The ETF has gained about 8.90% and it's up approximately 9.50% so far this year and in the past one year (as of 12/19/2023), respectively. FTA has traded between $61.60 and $73.30 during this last 52-week period.
The ETF has a beta of 1.12 and standard deviation of 17.45% for the trailing three-year period, making it a medium risk choice in the space. With about 188 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $54.72 billion in assets, Vanguard Value ETF has $105 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
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 Value.
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 Value AlphaDEX ETF (FTA) a Strong ETF Right Now?
Launched on 05/08/2007, the First Trust Large Cap Value AlphaDEX ETF (FTA - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by First Trust Advisors, FTA has amassed assets over $1.17 billion, making it one of the average sized ETFs in the Style Box - Large Cap Value. FTA seeks to match the performance of the Nasdaq AlphaDEX Large Cap Value Index before fees and expenses.
The NASDAQ AlphaDEX Large Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Value Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.59%, making it one of the more expensive products in the space.
FTA's 12-month trailing dividend yield is 2.17%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FTA, it has heaviest allocation in the Financials sector --about 26.40% of the portfolio --while Industrials and Utilities round out the top three.
Looking at individual holdings, Marathon Petroleum Corporation (MPC - Free Report) accounts for about 1.14% of total assets, followed by Keycorp (KEY - Free Report) and Ovintiv Inc. (OVV - Free Report) .
The top 10 holdings account for about 10.62% of total assets under management.
Performance and Risk
The ETF has gained about 8.90% and it's up approximately 9.50% so far this year and in the past one year (as of 12/19/2023), respectively. FTA has traded between $61.60 and $73.30 during this last 52-week period.
The ETF has a beta of 1.12 and standard deviation of 17.45% for the trailing three-year period, making it a medium risk choice in the space. With about 188 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $54.72 billion in assets, Vanguard Value ETF has $105 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
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 Value.
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.