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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 traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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
Managed by First Trust Advisors, FTC has amassed assets over $1.25 billion, making it one of the average sized ETFs in the Style Box - Large Cap Growth. FTC 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.
Annual operating expenses for FTC are 0.59%, which makes 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.
FTC's heaviest allocation is in the Information Technology sector, which is about 32.20% of the portfolio. Its 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) .
Its top 10 holdings account for approximately 10.04% of FTC's total assets under management.
Performance and Risk
So far this year, FTC has lost about -4.36%, and is up about 17.81% in the last one year (as of 01/06/2022). During this past 52-week period, the fund has traded between $91.91 and $124.15.
The ETF has a beta of 1.02 and standard deviation of 24.44% 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 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 $86.56 billion in assets, Invesco QQQ has $208.82 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 traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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
Managed by First Trust Advisors, FTC has amassed assets over $1.25 billion, making it one of the average sized ETFs in the Style Box - Large Cap Growth. FTC 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.
Annual operating expenses for FTC are 0.59%, which makes 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.
FTC's heaviest allocation is in the Information Technology sector, which is about 32.20% of the portfolio. Its 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) .
Its top 10 holdings account for approximately 10.04% of FTC's total assets under management.
Performance and Risk
So far this year, FTC has lost about -4.36%, and is up about 17.81% in the last one year (as of 01/06/2022). During this past 52-week period, the fund has traded between $91.91 and $124.15.
The ETF has a beta of 1.02 and standard deviation of 24.44% 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 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 $86.56 billion in assets, Invesco QQQ has $208.82 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.