Launched on 07/06/2006, the First Trust Capital Strength ETF (FTCS) is a passively managed exchange traded fund designed to provide a 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 $2.59 B, 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. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.60%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.14%.
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 Information Technology sector--about 22.20% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Unitedhealth Group Incorporated (UNH) accounts for about 2.30% of total assets, followed by Starbucks Corporation (SBUX) and Fleetcor Technologies, Inc. (FLT).
The top 10 holdings account for about 22% 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 added about 19.19% so far this year and was up about 10.15% in the last one year (as of 07/23/2019). In the past 52-week period, it has traded between $45.20 and $57.95.
The ETF has a beta of 0.90 and standard deviation of 11.96% 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 outstanding option for investors seeking exposure to the Style Box - Large Cap Blend 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 $181.68 B in assets, SPDR S&P 500 ETF has $280.67 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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
iShares Core S&P 500 ETF (IVV): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
FleetCor Technologies, Inc. (FLT) : Free Stock Analysis Report
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
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