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Is First Trust Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
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Launched on 05/08/2007, the First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth 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 work great for investors who believe in market efficiency. They provide 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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.10 billion, making it one of the average sized ETFs in the Style Box - Large Cap Growth. FTC seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index before fees and expenses.
The NASDAQ AlphaDEX Large Cap Growth Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Growth Index.
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 0.60% for FTC, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.32%.
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.
For FTC, it has heaviest allocation in the Industrials sector --about 27.10% of the portfolio --while Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Nvidia Corporation (NVDA - Free Report) accounts for about 1.23% of total assets, followed by Vistra Corp. (VST - Free Report) and Arista Networks, Inc. (ANET - Free Report) .
The top 10 holdings account for about 10.48% of total assets under management.
Performance and Risk
The ETF has added roughly 13.15% and it's up approximately 25.71% so far this year and in the past one year (as of 08/19/2024), respectively. FTC has traded between $91.56 and $126.60 during this last 52-week period.
The fund has a beta of 1.06 and standard deviation of 19.85% for the trailing three-year period, which makes FTC a medium risk choice in this particular space. With about 188 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $134.54 billion in assets, Invesco QQQ has $285.65 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
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 Growth.
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 Large Cap Growth AlphaDEX ETF (FTC) a Strong ETF Right Now?
Launched on 05/08/2007, the First Trust Large Cap Growth AlphaDEX ETF (FTC - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth 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 work great for investors who believe in market efficiency. They provide 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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.10 billion, making it one of the average sized ETFs in the Style Box - Large Cap Growth. FTC seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index before fees and expenses.
The NASDAQ AlphaDEX Large Cap Growth Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Growth Index.
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 0.60% for FTC, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.32%.
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.
For FTC, it has heaviest allocation in the Industrials sector --about 27.10% of the portfolio --while Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Nvidia Corporation (NVDA - Free Report) accounts for about 1.23% of total assets, followed by Vistra Corp. (VST - Free Report) and Arista Networks, Inc. (ANET - Free Report) .
The top 10 holdings account for about 10.48% of total assets under management.
Performance and Risk
The ETF has added roughly 13.15% and it's up approximately 25.71% so far this year and in the past one year (as of 08/19/2024), respectively. FTC has traded between $91.56 and $126.60 during this last 52-week period.
The fund has a beta of 1.06 and standard deviation of 19.85% for the trailing three-year period, which makes FTC a medium risk choice in this particular space. With about 188 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Growth AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $134.54 billion in assets, Invesco QQQ has $285.65 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
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 Growth.
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.