Should First Trust Growth Strength ETF (FTGS) Be on Your Investing Radar?
Designed to provide broad exposure to the Large Cap Growth segment of the US equity market, the First Trust Growth Strength ETF (FTGS) is a passively managed exchange traded fund launched on 10/25/2022.
The fund is sponsored by First Trust Advisors. It has amassed assets over $560.92 million, making it one of the average sized ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
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.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Also, growth stocks are a type of equity that carries more risk compared to others. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
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 0.60%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.36%.
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 Information Technology sector--about 31.20% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Nvidia Corporation (NVDA) accounts for about 3.03% of total assets, followed by Arista Networks, Inc. (ANET) and Monolithic Power Systems, Inc. (MPWR).
The top 10 holdings account for about 24.96% of total assets under management.
Performance and Risk
FTGS seeks to match the performance of the THE GROWTH STRENGTH INDEX before fees and expenses. The Growth Strength Index provides exposure to a mix of domestic equities with filters for liquidity, return on equity, long-term debt, revenue and cash flow growth.
The ETF has gained about 8.76% so far this year and is up roughly 22.93% in the last one year (as of 08/12/2024). In the past 52-week period, it has traded between $22.83 and $31.79.
The ETF has a beta of 1.12 and standard deviation of 16.27% for the trailing three-year period. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Growth 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, FTGS is an excellent option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $127.92 billion in assets, Invesco QQQ has $273.25 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Bottom-Line
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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Get it free >>First Trust Growth Strength ETF (FTGS): ETF Research Reports
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Monolithic Power Systems, Inc. (MPWR) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
Vanguard Growth ETF (VUG): ETF Research Reports
