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Is First Trust Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
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The First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
Because the fund has amassed over $1.12 billion, this makes it one of the average sized ETFs in the Style Box - Large Cap Growth. FTC is managed by First Trust Advisors. Before fees and expenses, this particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.60%.
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.
Representing 25.10% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Deckers Outdoor Corporation (DECK - Free Report) accounts for about 1.12% of the fund's total assets, followed by Uber Technologies, Inc. (UBER - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) .
FTC's top 10 holdings account for about 10.48% of its total assets under management.
Performance and Risk
The ETF has gained about 7.20% and was up about 24.97% so far this year and in the past one year (as of 02/12/2024), respectively. FTC has traded between $88.58 and $117.45 during this last 52-week period.
The ETF has a beta of 1.05 and standard deviation of 20.49% 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 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 $114.18 billion in assets, Invesco QQQ has $248.29 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?
The First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
Because the fund has amassed over $1.12 billion, this makes it one of the average sized ETFs in the Style Box - Large Cap Growth. FTC is managed by First Trust Advisors. Before fees and expenses, this particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.60%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.60%.
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.
Representing 25.10% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Industrials and Consumer Discretionary round out the top three.
Taking into account individual holdings, Deckers Outdoor Corporation (DECK - Free Report) accounts for about 1.12% of the fund's total assets, followed by Uber Technologies, Inc. (UBER - Free Report) and Royal Caribbean Cruises Ltd. (RCL - Free Report) .
FTC's top 10 holdings account for about 10.48% of its total assets under management.
Performance and Risk
The ETF has gained about 7.20% and was up about 24.97% so far this year and in the past one year (as of 02/12/2024), respectively. FTC has traded between $88.58 and $117.45 during this last 52-week period.
The ETF has a beta of 1.05 and standard deviation of 20.49% 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 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 $114.18 billion in assets, Invesco QQQ has $248.29 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.