We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is First Trust Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
Read MoreHide Full Article
Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) provides investors broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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
FTC is managed by First Trust Advisors, and this fund has amassed over $998.78 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index before fees and expenses.
The NASDAQ AlphaDEX Large Cap Growth Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Growth Index.
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 0.59% for FTC, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.99%.
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 in the Information Technology sector - about 26.30% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Royal Caribbean Cruises Ltd. (RCL - Free Report) accounts for about 1.33% of the fund's total assets, followed by Delta Air Lines, Inc. (DAL - Free Report) and Uber Technologies, Inc. (UBER - Free Report) .
Its top 10 holdings account for approximately 10.69% of FTC's total assets under management.
Performance and Risk
Year-to-date, the First Trust Large Cap Growth AlphaDEX ETF return is roughly 10.21% so far, and is up about 4.68% over the last 12 months (as of 08/10/2023). FTC has traded between $85.55 and $104.25 in this past 52-week period.
The ETF has a beta of 1.05 and standard deviation of 21.51% 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 Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $91.15 billion in assets, Invesco QQQ has $202.76 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
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 Growth.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is First Trust Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
Making its debut on 05/08/2007, smart beta exchange traded fund First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) provides investors broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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
FTC is managed by First Trust Advisors, and this fund has amassed over $998.78 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index before fees and expenses.
The NASDAQ AlphaDEX Large Cap Growth Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Growth Index.
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 0.59% for FTC, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.99%.
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 in the Information Technology sector - about 26.30% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Royal Caribbean Cruises Ltd. (RCL - Free Report) accounts for about 1.33% of the fund's total assets, followed by Delta Air Lines, Inc. (DAL - Free Report) and Uber Technologies, Inc. (UBER - Free Report) .
Its top 10 holdings account for approximately 10.69% of FTC's total assets under management.
Performance and Risk
Year-to-date, the First Trust Large Cap Growth AlphaDEX ETF return is roughly 10.21% so far, and is up about 4.68% over the last 12 months (as of 08/10/2023). FTC has traded between $85.55 and $104.25 in this past 52-week period.
The ETF has a beta of 1.05 and standard deviation of 21.51% 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 Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $91.15 billion in assets, Invesco QQQ has $202.76 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
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 Growth.
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.