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Should First Trust Large Cap Value AlphaDEX ETF (FTA) Be on Your Investing Radar?
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If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the First Trust Large Cap Value AlphaDEX ETF (FTA - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.15 billion, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.59%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 2.29%.
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 Financials sector--about 18.90% of the portfolio. Industrials and Utilities round out the top three.
Looking at individual holdings, Meta Platforms Inc. (class A) (META - Free Report) accounts for about 1.59% of total assets, followed by Fedex Corporation (FDX - Free Report) and Skyworks Solutions, Inc. (SWKS - Free Report) .
The top 10 holdings account for about 11.35% of total assets under management.
Performance and Risk
FTA seeks to match the performance of the Nasdaq AlphaDEX Large Cap Value Index before fees and expenses. The NASDAQ AlphaDEX Large Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Value Index.
The ETF has lost about -4.50% so far this year and is down about -5.08% in the last one year (as of 05/17/2023). In the past 52-week period, it has traded between $57.68 and $73.30.
The ETF has a beta of 1.11 and standard deviation of 21.43% 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 Value AlphaDEX 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, FTA is an excellent option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $48.51 billion in assets, Vanguard Value ETF has $98.76 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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Should First Trust Large Cap Value AlphaDEX ETF (FTA) Be on Your Investing Radar?
If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the First Trust Large Cap Value AlphaDEX ETF (FTA - Free Report) , a passively managed exchange traded fund launched on 05/08/2007.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.15 billion, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.59%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 2.29%.
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 Financials sector--about 18.90% of the portfolio. Industrials and Utilities round out the top three.
Looking at individual holdings, Meta Platforms Inc. (class A) (META - Free Report) accounts for about 1.59% of total assets, followed by Fedex Corporation (FDX - Free Report) and Skyworks Solutions, Inc. (SWKS - Free Report) .
The top 10 holdings account for about 11.35% of total assets under management.
Performance and Risk
FTA seeks to match the performance of the Nasdaq AlphaDEX Large Cap Value Index before fees and expenses. The NASDAQ AlphaDEX Large Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Value Index.
The ETF has lost about -4.50% so far this year and is down about -5.08% in the last one year (as of 05/17/2023). In the past 52-week period, it has traded between $57.68 and $73.30.
The ETF has a beta of 1.11 and standard deviation of 21.43% 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 Value AlphaDEX 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, FTA is an excellent option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $48.51 billion in assets, Vanguard Value ETF has $98.76 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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.