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 Quick QuoteFTA - 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 $1.21 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

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.

Annual operating expenses for this ETF are 0.60%, making it one of the most expensive products in the space.

It has a 12-month trailing dividend yield of 2.01%.

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 22.40% of the portfolio. Utilities and Energy round out the top three.

Looking at individual holdings, D.r. Horton, Inc. (DHI Quick QuoteDHI - Free Report) accounts for about 1.11% of total assets, followed by Fox Corporation (class A) (FOXA Quick QuoteFOXA - Free Report) and Lennar Corporation (LEN Quick QuoteLEN - Free Report) .

The top 10 holdings account for about 9.93% 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 added about 12.81% so far this year and was up about 26.02% in the last one year (as of 10/03/2024). In the past 52-week period, it has traded between $61.60 and $79.14.

The ETF has a beta of 1.07 and standard deviation of 16.87% 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 a great 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 Schwab U.S. Dividend Equity ETF (SCHD Quick QuoteSCHD - Free Report) and the Vanguard Value ETF (VTV Quick QuoteVTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $61.35 billion in assets, Vanguard Value ETF has $127.41 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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.