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 $909.15 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.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
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%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.44%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 25.40% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, W.r. Berkley Corporation (WRB) accounts for about 2.63% of total assets, followed by Cencora Inc. (COR) and Netflix, Inc. (NFLX).
The top 10 holdings account for about 23.31% 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 lost about -9.28% so far this year and is down about -1.40% in the last one year (as of 04/21/2025). In the past 52-week period, it has traded between $26.62 and $33.31.
The ETF has a beta of 1.14 and standard deviation of 17.85% for the trailing three-year period. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Growth 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, FTGS is a sufficient option for those seeking exposure to the Style Box - Large Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) track a similar index. While Vanguard Growth ETF has $137.58 billion in assets, Invesco QQQ has $284.68 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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First Trust Growth Strength ETF (FTGS): ETF Research Reports Netflix, Inc. (NFLX): Free Stock Analysis Report W.R. Berkley Corporation (WRB): Free Stock Analysis Report Cencora, Inc. (COR): Free Stock Analysis Report Invesco QQQ (QQQ): ETF Research Reports Vanguard Growth ETF (VUG): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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