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Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?
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The First Trust Capital Strength ETF (FTCS - Free Report) made its debut on 07/06/2006, and is a smart beta exchange traded fund that provides 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.
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.
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
The fund is managed by First Trust Advisors, and has been able to amass over $8.68 billion, which makes 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.55% for FTCS, making it on par with most peer products in the space.
FTCS's 12-month trailing dividend yield is 1.32%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
FTCS's heaviest allocation is in the Industrials sector, which is about 23.70% of the portfolio. Its Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Paccar Inc (PCAR - Free Report) accounts for about 2.35% of total assets, followed by Cummins Inc. (CMI - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) .
The top 10 holdings account for about 22.14% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Capital Strength ETF has gained about 4.89% so far, and it's up approximately 18.37% over the last 12 months (as of 05/27/2024). FTCS has traded between $71.23 and $85.66 in this past 52-week period.
The fund has a beta of 0.85 and standard deviation of 13.66% 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 $463.93 billion in assets, SPDR S&P 500 ETF has $533.62 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.
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Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?
The First Trust Capital Strength ETF (FTCS - Free Report) made its debut on 07/06/2006, and is a smart beta exchange traded fund that provides 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.
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.
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
The fund is managed by First Trust Advisors, and has been able to amass over $8.68 billion, which makes 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.55% for FTCS, making it on par with most peer products in the space.
FTCS's 12-month trailing dividend yield is 1.32%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
FTCS's heaviest allocation is in the Industrials sector, which is about 23.70% of the portfolio. Its Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Paccar Inc (PCAR - Free Report) accounts for about 2.35% of total assets, followed by Cummins Inc. (CMI - Free Report) and Chipotle Mexican Grill, Inc. (CMG - Free Report) .
The top 10 holdings account for about 22.14% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Capital Strength ETF has gained about 4.89% so far, and it's up approximately 18.37% over the last 12 months (as of 05/27/2024). FTCS has traded between $71.23 and $85.66 in this past 52-week period.
The fund has a beta of 0.85 and standard deviation of 13.66% 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 $463.93 billion in assets, SPDR S&P 500 ETF has $533.62 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.