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Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?
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The First Trust Capital Strength ETF (FTCS - Free Report) was launched on 07/06/2006, and is a smart beta exchange traded fund designed to offer 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $8.55 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, this particular fund 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.
Annual operating expenses for this ETF are 0.55%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.26%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 31.20% of the portfolio, the fund has heaviest allocation to the Healthcare sector; Industrials and Information Technology round out the top three.
Taking into account individual holdings, Moody's Corporation (MCO - Free Report) accounts for about 2.36% of the fund's total assets, followed by Air Products And Chemicals, Inc. (APD - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Its top 10 holdings account for approximately 22.44% of FTCS's total assets under management.
Performance and Risk
So far this year, FTCS has lost about -2.63%, and is down about -0.12% in the last one year (as of 02/27/2023). During this past 52-week period, the fund has traded between $66.42 and $79.15.
The fund has a beta of 0.86 and standard deviation of 22% 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 $298.09 billion in assets, SPDR S&P 500 ETF has $362.14 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?
The First Trust Capital Strength ETF (FTCS - Free Report) was launched on 07/06/2006, and is a smart beta exchange traded fund designed to offer 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $8.55 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, this particular fund 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.
Annual operating expenses for this ETF are 0.55%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.26%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 31.20% of the portfolio, the fund has heaviest allocation to the Healthcare sector; Industrials and Information Technology round out the top three.
Taking into account individual holdings, Moody's Corporation (MCO - Free Report) accounts for about 2.36% of the fund's total assets, followed by Air Products And Chemicals, Inc. (APD - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Its top 10 holdings account for approximately 22.44% of FTCS's total assets under management.
Performance and Risk
So far this year, FTCS has lost about -2.63%, and is down about -0.12% in the last one year (as of 02/27/2023). During this past 52-week period, the fund has traded between $66.42 and $79.15.
The fund has a beta of 0.86 and standard deviation of 22% 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 $298.09 billion in assets, SPDR S&P 500 ETF has $362.14 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.