The First Trust Capital Strength ETF (FTCS) was launched on 07/06/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Blend segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $4.60 billion, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.60%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.32%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector--about 29.80% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Facebook, Inc. (class A) (FB) accounts for about 2.33% of total assets, followed by F5 Networks, Inc. (FFIV) and Ebay Inc. (EBAY).
The top 10 holdings account for about 21.62% of total assets under management.
Performance and Risk
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.
The ETF has lost about -9.59% so far this year and is down about -0.52% in the last one year (as of 05/22/2020). In the past 52-week period, it has traded between $43.11 and $63.33.
The ETF has a beta of 0.89 and standard deviation of 20.49% 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.
First Trust Capital Strength ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FTCS is a good option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core SP 500 ETF (IVV) and the SPDR SP 500 ETF (SPY) track a similar index. While iShares Core SP 500 ETF has $183.64 billion in assets, SPDR SP 500 ETF has $263.29 billion. IVV has an expense ratio of 0.04% and SPY charges 0.09%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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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First Trust Capital Strength ETF (FTCS): ETF Research Reports
eBay Inc. (EBAY) : Free Stock Analysis Report
F5 Networks, Inc. (FFIV) : Free Stock Analysis Report
SPDR SP 500 ETF (SPY): ETF Research Reports
Facebook, Inc. (FB) : Free Stock Analysis Report
iShares Core SP 500 ETF (IVV): ETF Research Reports
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