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Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?
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Launched on 07/06/2006, the First Trust Capital Strength ETF (FTCS - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend 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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FTCS has been able to amass assets over $8.72 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. Before fees and expenses, FTCS 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 0.55% for FTCS, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.42%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector - about 28% of the portfolio. Industrials and Financials round out the top three.
Taking into account individual holdings, Eli Lilly And Company (LLY - Free Report) accounts for about 2.37% of the fund's total assets, followed by Netapp, Inc. (NTAP - Free Report) and Copart, Inc. (CPRT - Free Report) .
Its top 10 holdings account for approximately 22.18% of FTCS's total assets under management.
Performance and Risk
The ETF has added about 2.07% and is up about 4.29% so far this year and in the past one year (as of 09/13/2023), respectively. FTCS has traded between $66.42 and $78.75 during this last 52-week period.
The fund has a beta of 0.86 and standard deviation of 14.46% 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 an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $349.15 billion in assets, SPDR S&P 500 ETF has $413.24 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?
Launched on 07/06/2006, the First Trust Capital Strength ETF (FTCS - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend 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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FTCS has been able to amass assets over $8.72 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. Before fees and expenses, FTCS 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 0.55% for FTCS, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.42%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector - about 28% of the portfolio. Industrials and Financials round out the top three.
Taking into account individual holdings, Eli Lilly And Company (LLY - Free Report) accounts for about 2.37% of the fund's total assets, followed by Netapp, Inc. (NTAP - Free Report) and Copart, Inc. (CPRT - Free Report) .
Its top 10 holdings account for approximately 22.18% of FTCS's total assets under management.
Performance and Risk
The ETF has added about 2.07% and is up about 4.29% so far this year and in the past one year (as of 09/13/2023), respectively. FTCS has traded between $66.42 and $78.75 during this last 52-week period.
The fund has a beta of 0.86 and standard deviation of 14.46% 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 an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $349.15 billion in assets, SPDR S&P 500 ETF has $413.24 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.