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Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the First Trust Capital Strength ETF (FTCS - Free Report) is a smart beta exchange traded fund launched on 07/06/2006.
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $8.74 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Blend. FTCS is managed by First Trust Advisors. This particular fund, before fees and expenses, 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
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.
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 1.23%.
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.
FTCS's heaviest allocation is in the Healthcare sector, which is about 31.40% of the portfolio. Its Industrials and Financials round out the top three.
Looking at individual holdings, Trane Technologies Plc (TT - Free Report) accounts for about 2.34% of total assets, followed by Parker-Hannifin Corporation (PH - Free Report) and Nasdaq, Inc. (NDAQ - Free Report) .
The top 10 holdings account for about 22.28% of total assets under management.
Performance and Risk
The ETF has lost about -9.03% and is down about -7.98% so far this year and in the past one year (as of 12/27/2022), respectively. FTCS has traded between $66.42 and $84.75 during this last 52-week period.
The ETF has a beta of 0.88 and standard deviation of 21.96% for the trailing three-year period, making it a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Capital Strength ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
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 $290.06 billion in assets, SPDR S&P 500 ETF has $362.55 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?
Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the First Trust Capital Strength ETF (FTCS - Free Report) is a smart beta exchange traded fund launched on 07/06/2006.
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $8.74 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Blend. FTCS is managed by First Trust Advisors. This particular fund, before fees and expenses, 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
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.
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 1.23%.
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.
FTCS's heaviest allocation is in the Healthcare sector, which is about 31.40% of the portfolio. Its Industrials and Financials round out the top three.
Looking at individual holdings, Trane Technologies Plc (TT - Free Report) accounts for about 2.34% of total assets, followed by Parker-Hannifin Corporation (PH - Free Report) and Nasdaq, Inc. (NDAQ - Free Report) .
The top 10 holdings account for about 22.28% of total assets under management.
Performance and Risk
The ETF has lost about -9.03% and is down about -7.98% so far this year and in the past one year (as of 12/27/2022), respectively. FTCS has traded between $66.42 and $84.75 during this last 52-week period.
The ETF has a beta of 0.88 and standard deviation of 21.96% for the trailing three-year period, making it a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Capital Strength ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
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 $290.06 billion in assets, SPDR S&P 500 ETF has $362.55 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.