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Is First Trust Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
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Launched on 05/08/2007, the First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.07 billion, making it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.41%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FTC's heaviest allocation is in the Information Technology sector, which is about 24.50% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Super Micro Computer, Inc. (SMCI - Free Report) accounts for about 3.09% of total assets, followed by Nvidia Corporation (NVDA - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Its top 10 holdings account for approximately 12.59% of FTC's total assets under management.
Performance and Risk
Year-to-date, the First Trust Large Cap Growth AlphaDEX ETF has added about 6.43% so far, and is up about 24.91% over the last 12 months (as of 04/16/2024). FTC has traded between $90.91 and $123.93 in this past 52-week period.
FTC has a beta of 1.05 and standard deviation of 19.72% for the trailing three-year period, which makes the fund a medium risk choice in the 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 $115.36 billion in assets, Invesco QQQ has $251.14 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?
Launched on 05/08/2007, the First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.07 billion, making it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index before fees and expenses.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.41%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
FTC's heaviest allocation is in the Information Technology sector, which is about 24.50% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Super Micro Computer, Inc. (SMCI - Free Report) accounts for about 3.09% of total assets, followed by Nvidia Corporation (NVDA - Free Report) and Deckers Outdoor Corporation (DECK - Free Report) .
Its top 10 holdings account for approximately 12.59% of FTC's total assets under management.
Performance and Risk
Year-to-date, the First Trust Large Cap Growth AlphaDEX ETF has added about 6.43% so far, and is up about 24.91% over the last 12 months (as of 04/16/2024). FTC has traded between $90.91 and $123.93 in this past 52-week period.
FTC has a beta of 1.05 and standard deviation of 19.72% for the trailing three-year period, which makes the fund a medium risk choice in the 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 $115.36 billion in assets, Invesco QQQ has $251.14 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.