Is First Trust Capital Strength ETF (FTCS) a Strong ETF Right Now?

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

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This article originally published on Zacks Investment Research (zacks.com).

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