Launched on 07/06/2006, the First Trust Capital Strength ETF (FTCS) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
FTCS is managed by First Trust Advisors, and this fund has amassed over $8.37 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. FTCS, before fees and expenses, 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.
Annual operating expenses for FTCS are 0.52%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.98%.
Sector Exposure and Top Holdings
ETFs offer 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.
Representing 22.7% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Consumer Staples round out the top three.
Taking into account individual holdings, Gilead Sciences, Inc. (GILD) accounts for about 2.34% of the fund's total assets, followed by Pepsico, Inc. (PEP) and The Hershey Company (HSY).
Its top 10 holdings account for approximately 22.07% of FTCS's total assets under management.
Performance and Risk
The ETF has added about 6.13% and it's up approximately 10.47% so far this year and in the past one year (as of 02/19/2026), respectively. FTCS has traded between $81.60 and $99.10 during this last 52-week period.
The fund has a beta of 0.78 and standard deviation of 11.16% 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.
iShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the Vanguard S&P 500 ETF (VOO) tracks S&P 500 Index. iShares Core S&P 500 ETF has $754.72 billion in assets, Vanguard S&P 500 ETF has $854.53 billion. IVV has an expense ratio of 0.03% 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.
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First Trust Capital Strength ETF (FTCS): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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