We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?
Read MoreHide Full Article
Making its debut on 07/06/2006, smart beta exchange traded fund First Trust Capital Strength ETF (FTCS - Free Report) provides investors 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
FTCS is managed by First Trust Advisors, and this fund has amassed over $8.48 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. FTCS seeks to match the performance of the The Capital Strength Index before fees and expenses.
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 this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.36%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FTCS, it has heaviest allocation in the Industrials sector --about 24.10% of the portfolio --while Healthcare and Financials round out the top three.
When you look at individual holdings, Eli Lilly And Company (LLY - Free Report) accounts for about 2.45% of the fund's total assets, followed by Cisco Systems, Inc. (CSCO - Free Report) and The Tjx Companies, Inc. (TJX - Free Report) .
Its top 10 holdings account for approximately 21.6% of FTCS's total assets under management.
Performance and Risk
The ETF return is roughly 2.50% and is up about 2.52% so far this year and in the past one year (as of 11/15/2023), respectively. FTCS has traded between $70.47 and $78.75 during this last 52-week period.
The ETF has a beta of 0.86 and standard deviation of 14.15% for the trailing three-year period, making it a medium risk choice in the 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 $368.37 billion in assets, SPDR S&P 500 ETF has $421.62 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?
Making its debut on 07/06/2006, smart beta exchange traded fund First Trust Capital Strength ETF (FTCS - Free Report) provides investors 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
FTCS is managed by First Trust Advisors, and this fund has amassed over $8.48 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. FTCS seeks to match the performance of the The Capital Strength Index before fees and expenses.
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 this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.36%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FTCS, it has heaviest allocation in the Industrials sector --about 24.10% of the portfolio --while Healthcare and Financials round out the top three.
When you look at individual holdings, Eli Lilly And Company (LLY - Free Report) accounts for about 2.45% of the fund's total assets, followed by Cisco Systems, Inc. (CSCO - Free Report) and The Tjx Companies, Inc. (TJX - Free Report) .
Its top 10 holdings account for approximately 21.6% of FTCS's total assets under management.
Performance and Risk
The ETF return is roughly 2.50% and is up about 2.52% so far this year and in the past one year (as of 11/15/2023), respectively. FTCS has traded between $70.47 and $78.75 during this last 52-week period.
The ETF has a beta of 0.86 and standard deviation of 14.15% for the trailing three-year period, making it a medium risk choice in the 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 $368.37 billion in assets, SPDR S&P 500 ETF has $421.62 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.