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Is First Trust Large Cap Value AlphaDEX ETF (FTA) a Strong ETF Right Now?
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The First Trust Large Cap Value AlphaDEX ETF (FTA - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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
FTA is managed by First Trust Advisors, and this fund has amassed over $1.21 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Large Cap Value Index.
The NASDAQ AlphaDEX Large Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Value Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.60% for FTA, making it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.98%.
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 FTA, it has heaviest allocation in the Financials sector --about 22.60% of the portfolio --while Energy and Utilities round out the top three.
Taking into account individual holdings, D.r. Horton, Inc. (DHI - Free Report) accounts for about 1.09% of the fund's total assets, followed by Fox Corporation (class A) (FOXA - Free Report) and Lennar Corporation (LEN - Free Report) .
FTA's top 10 holdings account for about 9.74% of its total assets under management.
Performance and Risk
The ETF has added roughly 10.74% and it's up approximately 18.31% so far this year and in the past one year (as of 08/29/2024), respectively. FTA has traded between $61.60 and $78.14 during this last 52-week period.
The fund has a beta of 1.08 and standard deviation of 16.96% for the trailing three-year period, which makes FTA a medium risk choice in this particular space. With about 188 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Value AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $59.72 billion in assets, Vanguard Value ETF has $123.84 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
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 Value.
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 Value AlphaDEX ETF (FTA) a Strong ETF Right Now?
The First Trust Large Cap Value AlphaDEX ETF (FTA - Free Report) made its debut on 05/08/2007, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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
FTA is managed by First Trust Advisors, and this fund has amassed over $1.21 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Nasdaq AlphaDEX Large Cap Value Index.
The NASDAQ AlphaDEX Large Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Value Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.60% for FTA, making it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 1.98%.
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 FTA, it has heaviest allocation in the Financials sector --about 22.60% of the portfolio --while Energy and Utilities round out the top three.
Taking into account individual holdings, D.r. Horton, Inc. (DHI - Free Report) accounts for about 1.09% of the fund's total assets, followed by Fox Corporation (class A) (FOXA - Free Report) and Lennar Corporation (LEN - Free Report) .
FTA's top 10 holdings account for about 9.74% of its total assets under management.
Performance and Risk
The ETF has added roughly 10.74% and it's up approximately 18.31% so far this year and in the past one year (as of 08/29/2024), respectively. FTA has traded between $61.60 and $78.14 during this last 52-week period.
The fund has a beta of 1.08 and standard deviation of 16.96% for the trailing three-year period, which makes FTA a medium risk choice in this particular space. With about 188 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Value AlphaDEX ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $59.72 billion in assets, Vanguard Value ETF has $123.84 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
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 Value.
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.