The First Trust Large Cap Growth AlphaDEX ETF (
FTC Quick Quote FTC - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
The fund is managed by First Trust Advisors. FTC has been able to amass assets over $865.07 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. Before fees and expenses, FTC 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
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 this ETF are 0.59%, making it on par with most peer products in the space.
FTC's 12-month trailing dividend yield is 0.10%.
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.
For FTC, it has heaviest allocation in the Information Technology sector --about 29.60% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Cheniere Energy, Inc. (
LNG Quick Quote LNG - Free Report) accounts for about 1.36% of total assets, followed by Nucor Corporation ( NUE Quick Quote NUE - Free Report) and Occidental Petroleum Corporation ( OXY Quick Quote OXY - Free Report) .
Its top 10 holdings account for approximately 11.17% of FTC's total assets under management.
Performance and Risk
Year-to-date, the First Trust Large Cap Growth AlphaDEX ETF has lost about -23.20% so far, and is down about -10.56% over the last 12 months (as of 05/10/2022). FTC has traded between $91.06 and $124.15 in this past 52-week period.
The fund has a beta of 1.06 and standard deviation of 26.08% 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.
First Trust Large Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (
VUG Quick Quote VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ ( QQQ Quick Quote QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $68.04 billion in assets, Invesco QQQ has $162.07 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.
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.