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Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?
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Launched on 07/06/2006, the First Trust Capital Strength ETF (FTCS - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $8.96 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Blend. FTCS is managed by First Trust Advisors. Before fees and expenses, FTCS seeks to match the performance of the The Capital Strength Index.
The Capital Strength Index is an equal-dollar weighted index which provides exposure to well-capitalized companies with strong market positions based on strong balance sheets, high degree of liquidity, ability to generate earnings growth & record financial strength & profit growth.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.55% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.31%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 24% of the portfolio, the fund has heaviest allocation to the Industrials sector; Healthcare and Consumer Staples round out the top three.
Taking into account individual holdings, Gartner, Inc. (IT - Free Report) accounts for about 2.45% of the fund's total assets, followed by Moody's Corporation (MCO - Free Report) and Garmin Ltd. (GRMN - Free Report) .
The top 10 holdings account for about 22.3% of total assets under management.
Performance and Risk
The ETF has gained about 6.14% so far this year and was up about 21.45% in the last one year (as of 03/27/2024). In the past 52-week period, it has traded between $71.23 and $85.66.
The fund has a beta of 0.84 and standard deviation of 13.78% for the trailing three-year period, which makes FTCS a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Capital Strength ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $437.15 billion in assets, SPDR S&P 500 ETF has $531.25 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 Blend.
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 Capital Strength ETF (FTCS) a Strong ETF Right Now?
Launched on 07/06/2006, the First Trust Capital Strength ETF (FTCS - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $8.96 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Blend. FTCS is managed by First Trust Advisors. Before fees and expenses, FTCS seeks to match the performance of the The Capital Strength Index.
The Capital Strength Index is an equal-dollar weighted index which provides exposure to well-capitalized companies with strong market positions based on strong balance sheets, high degree of liquidity, ability to generate earnings growth & record financial strength & profit growth.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.55% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.31%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Representing 24% of the portfolio, the fund has heaviest allocation to the Industrials sector; Healthcare and Consumer Staples round out the top three.
Taking into account individual holdings, Gartner, Inc. (IT - Free Report) accounts for about 2.45% of the fund's total assets, followed by Moody's Corporation (MCO - Free Report) and Garmin Ltd. (GRMN - Free Report) .
The top 10 holdings account for about 22.3% of total assets under management.
Performance and Risk
The ETF has gained about 6.14% so far this year and was up about 21.45% in the last one year (as of 03/27/2024). In the past 52-week period, it has traded between $71.23 and $85.66.
The fund has a beta of 0.84 and standard deviation of 13.78% for the trailing three-year period, which makes FTCS a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Capital Strength ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $437.15 billion in assets, SPDR S&P 500 ETF has $531.25 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 Blend.
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.