Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the First Trust Capital Strength ETF (FTCS) is a smart beta exchange traded fund launched on 07/06/2006.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by First Trust Advisors, FTCS has amassed assets over $8.21 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. Before fees and expenses, FTCS seeks to match the performance of the The Capital Strength Index.
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.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.52% for FTCS, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.03%.
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.
Representing 24.7% of the portfolio, the fund has heaviest allocation to the Industrials sector; Consumer Staples and Financials round out the top three.
When you look at individual holdings, Electronic Arts Inc. (EA) accounts for about 2.61% of the fund's total assets, followed by Ross Stores, Inc. (ROST) and The Tjx Companies, Inc. (TJX).
Its top 10 holdings account for approximately 23.09% of FTCS's total assets under management.
Performance and Risk
So far this year, FTCS return is roughly 7.43%, and is up roughly 4.84% in the last one year (as of 12/16/2025). During this past 52-week period, the fund has traded between $81.60 and $93.84.
The fund has a beta of 0.79 and standard deviation of 11.34% for the trailing three-year period, which makes FTCS a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Capital Strength ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
SPDR S&P 500 ETF (SPY) tracks S&P 500 Index and the Vanguard S&P 500 ETF (VOO) tracks S&P 500 Index. SPDR S&P 500 ETF has $712.36 billion in assets, Vanguard S&P 500 ETF has $820.75 billion. SPY has an expense ratio of 0.09% and VOO changes 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend
Bottom Line
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
First Trust Capital Strength ETF (FTCS): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
