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Should First Trust Capital Strength ETF (FTCS) Be on Your Investing Radar?

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Launched on 07/06/2006, the First Trust Capital Strength ETF (FTCS - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Blend segment of the US equity market.

The fund is sponsored by First Trust Advisors. It has amassed assets over $8.29 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.55%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.30%.

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.

This ETF has heaviest allocation to the Healthcare sector--about 31.10% of the portfolio. Industrials and Information Technology round out the top three.

Looking at individual holdings, Moody's Corporation (MCO - Free Report) accounts for about 2.36% of total assets, followed by Air Products And Chemicals, Inc. (APD - Free Report) and Hologic, Inc. (HOLX - Free Report) .

The top 10 holdings account for about 22.44% of total assets under management.

Performance and Risk

FTCS seeks to match the performance of the The Capital Strength Index before fees and expenses. 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.

The ETF has lost about -5.56% so far this year and is down about -8.14% in the last one year (as of 03/23/2023). In the past 52-week period, it has traded between $66.42 and $79.15.

The ETF has a beta of 0.87 and standard deviation of 18.03% 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 holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FTCS is an outstanding option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Core S&P 500 ETF (IVV - Free Report) and the SPDR S&P 500 ETF (SPY - Free Report) track a similar index. While iShares Core S&P 500 ETF has $294.44 billion in assets, SPDR S&P 500 ETF has $363.46 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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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