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Is First Trust Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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
The fund is managed by First Trust Advisors, and has been able to amass over $1 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.59% for FTC, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.79%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FTC, it has heaviest allocation in the Information Technology sector --about 30.80% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Booking Holdings Inc. (BKNG - Free Report) accounts for about 1.04% of the fund's total assets, followed by Apollo Global Management, Inc. (APO - Free Report) and Constellation Energy Corporation (CEG - Free Report) .
The top 10 holdings account for about 9.87% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Large Cap Growth AlphaDEX ETF has gained about 15.34% so far, and it's up approximately 11.25% over the last 12 months (as of 12/11/2023). FTC has traded between $88.58 and $105.05 in this past 52-week period.
FTC has a beta of 1.04 and standard deviation of 20.73% for the trailing three-year period, which makes the fund 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 an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
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 $100.55 billion in assets, Invesco QQQ has $221.49 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.
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Is First Trust Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) is a smart beta exchange traded fund launched on 05/08/2007.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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
The fund is managed by First Trust Advisors, and has been able to amass over $1 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.59% for FTC, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.79%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FTC, it has heaviest allocation in the Information Technology sector --about 30.80% of the portfolio --while Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Booking Holdings Inc. (BKNG - Free Report) accounts for about 1.04% of the fund's total assets, followed by Apollo Global Management, Inc. (APO - Free Report) and Constellation Energy Corporation (CEG - Free Report) .
The top 10 holdings account for about 9.87% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Large Cap Growth AlphaDEX ETF has gained about 15.34% so far, and it's up approximately 11.25% over the last 12 months (as of 12/11/2023). FTC has traded between $88.58 and $105.05 in this past 52-week period.
FTC has a beta of 1.04 and standard deviation of 20.73% for the trailing three-year period, which makes the fund 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 an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
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 $100.55 billion in assets, Invesco QQQ has $221.49 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.