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Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Capital Strength ETF (FTCS - Free Report) debuted on 07/06/2006, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by First Trust Advisors, FTCS has amassed assets over $8.83 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. FTCS, before fees and expenses, seeks to match the performance of the The Capital Strength Index.
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
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.
Operating expenses on an annual basis are 0.56% for this ETF, which makes it on par with most peer products in the space.
FTCS's 12-month trailing dividend yield is 1.08%.
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.
This ETF has heaviest allocation in the Industrials sector - about 19.30% of the portfolio. Healthcare and Consumer Staples round out the top three.
When you look at individual holdings, Markel Corporation (MKL - Free Report) accounts for about 2.38% of the fund's total assets, followed by Humana Inc. (HUM - Free Report) and Costco Wholesale Corporation (COST - Free Report) .
FTCS's top 10 holdings account for about 22.61% of its total assets under management.
Performance and Risk
The ETF has lost about -6.04% so far this year and was up about 7.87% in the last one year (as of 04/21/2022). In the past 52-week period, it has traded between $73.51 and $84.75.
The fund has a beta of 0.93 and standard deviation of 20.66% for the trailing three-year period, which makes FTCS a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Capital Strength ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
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 $317.90 billion in assets, SPDR S&P 500 ETF has $404.46 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?
A smart beta exchange traded fund, the First Trust Capital Strength ETF (FTCS - Free Report) debuted on 07/06/2006, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by First Trust Advisors, FTCS has amassed assets over $8.83 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. FTCS, before fees and expenses, seeks to match the performance of the The Capital Strength Index.
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
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.
Operating expenses on an annual basis are 0.56% for this ETF, which makes it on par with most peer products in the space.
FTCS's 12-month trailing dividend yield is 1.08%.
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.
This ETF has heaviest allocation in the Industrials sector - about 19.30% of the portfolio. Healthcare and Consumer Staples round out the top three.
When you look at individual holdings, Markel Corporation (MKL - Free Report) accounts for about 2.38% of the fund's total assets, followed by Humana Inc. (HUM - Free Report) and Costco Wholesale Corporation (COST - Free Report) .
FTCS's top 10 holdings account for about 22.61% of its total assets under management.
Performance and Risk
The ETF has lost about -6.04% so far this year and was up about 7.87% in the last one year (as of 04/21/2022). In the past 52-week period, it has traded between $73.51 and $84.75.
The fund has a beta of 0.93 and standard deviation of 20.66% for the trailing three-year period, which makes FTCS a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Capital Strength ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
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 $317.90 billion in assets, SPDR S&P 500 ETF has $404.46 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.