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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) made its debut on 07/06/2006, and is a smart beta exchange traded fund that provides 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $8.80 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. 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.
Cost & Other Expenses
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.
Operating expenses on an annual basis are 0.55% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.43%.
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 31.70% of the portfolio, the fund has heaviest allocation to the Healthcare sector; Industrials and Consumer Staples round out the top three.
Taking into account individual holdings, Cisco Systems, Inc. (CSCO - Free Report) accounts for about 2.28% of the fund's total assets, followed by Lockheed Martin Corporation (LMT - Free Report) and Trane Technologies Plc (TT - Free Report) .
The top 10 holdings account for about 22.14% of total assets under management.
Performance and Risk
The ETF return is roughly 0.88% so far this year and is up about 8.90% in the last one year (as of 07/03/2023). In the past 52-week period, it has traded between $66.42 and $78.75.
The ETF has a beta of 0.86 and standard deviation of 14.84% 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 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 $334.90 billion in assets, SPDR S&P 500 ETF has $419.35 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) made its debut on 07/06/2006, and is a smart beta exchange traded fund that provides 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $8.80 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. 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.
Cost & Other Expenses
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.
Operating expenses on an annual basis are 0.55% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.43%.
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 31.70% of the portfolio, the fund has heaviest allocation to the Healthcare sector; Industrials and Consumer Staples round out the top three.
Taking into account individual holdings, Cisco Systems, Inc. (CSCO - Free Report) accounts for about 2.28% of the fund's total assets, followed by Lockheed Martin Corporation (LMT - Free Report) and Trane Technologies Plc (TT - Free Report) .
The top 10 holdings account for about 22.14% of total assets under management.
Performance and Risk
The ETF return is roughly 0.88% so far this year and is up about 8.90% in the last one year (as of 07/03/2023). In the past 52-week period, it has traded between $66.42 and $78.75.
The ETF has a beta of 0.86 and standard deviation of 14.84% 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 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 $334.90 billion in assets, SPDR S&P 500 ETF has $419.35 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.