Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the First Trust Capital Strength ETF (FTCS), a passively managed exchange traded fund launched on 07/06/2006.
The fund is sponsored by First Trust Advisors. It has amassed assets over $819.16 M, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.64%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.17%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 26% of the portfolio. Financials and Information Technology round out the top three.
Looking at individual holdings, Altria Group, Inc. (MO) accounts for about 2.01% of total assets, followed by Booking Holdings Inc. (BKNG) and Nike, Inc. (class B) (NKE).
The top 10 holdings account for about 20.05% 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 -0.91% so far this year and was up about 13.76% in the last one year (as of 04/28/2018). In the past 52-week period, it has traded between $44.60 and $54.95.
The ETF has a beta of 0.94 and standard deviation of 12.27% for the trailing three-year period, making it a medium risk choice in the space. With about 50 holdings, it has more concentrated exposure than peers.
First Trust Capital Strength ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, FTCS is an excellent option for investors seeking exposure to the Large Cap ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $143.74 B in assets, SPDR S&P 500 ETF has $255.65 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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SPDR-SP 500 TR (SPY): ETF Research Reports
ISHARS-SP500 (IVV): ETF Research Reports
NIKE, Inc. (NKE) : Free Stock Analysis Report
Altria Group, Inc. (MO) : Free Stock Analysis Report
FT-CAP STR E (FTCS): ETF Research Reports
Booking Holdings Inc. (BKNG) : Free Stock Analysis Report
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