Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the First Trust Capital Strength ETF (FTCS) is a passively managed exchange traded fund launched on 07/06/2006.
The fund is sponsored by First Trust Advisors. It has amassed assets over $1.73 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. Overall, they are usually a stable option, with less risk and more sure-fire cash flows 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.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.61%, 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
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 24.30% of the portfolio. Industrials and Consumer Staples round out the top three.
Looking at individual holdings, Td Ameritrade Holding Corporation (AMTD) accounts for about 2.09% of total assets, followed by Cummins Inc. (CMI) and United Parcel Service, Inc. (class B) (UPS).
The top 10 holdings account for about 20.51% 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 roughly 7.56% so far this year and was up about 4.04% in the last one year (as of 02/06/2019). In the past 52-week period, it has traded between $45.20 and $55.82.
The ETF has a beta of 0.90 and standard deviation of 12.15% 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.
Alternatives
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 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 $156.47 B in assets, SPDR S&P 500 ETF has $253.73 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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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Cummins Inc. (CMI): Free Stock Analysis Report
TD Ameritrade Holding Corporation (AMTD): Free Stock Analysis Report
iShares Core S&P 500 ETF (IVV): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
United Parcel Service, Inc. (UPS): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
