Should First Trust Capital Strength ETF (FTCS) Be on Your Investing Radar?

Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the First Trust Capital Strength ETF (FTCS), a passively managed exchange traded fund launched on 07/06/2006.

The fund is sponsored by First Trust Advisors. It has amassed assets over $8.48 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.54%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.27%.

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 22.90% of the portfolio. Industrials and Consumer Staples round out the top three.

Looking at individual holdings, W.r. Berkley Corporation (WRB) accounts for about 2.41% of total assets, followed by Monster Beverage Corporation (MNST) and Cencora Inc. (COR).

The top 10 holdings account for about 22.66% of total assets under management.

Performance and Risk

FTCS seeks to match the performance of the The Capital Strength Index before fees and expenses. 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.

The ETF return is roughly 4.37% so far this year and is up about 9.77% in the last one year (as of 05/16/2025). In the past 52-week period, it has traded between $81.60 and $94.03.

The ETF has a beta of 0.82 and standard deviation of 13.59% for the trailing three-year period, making it a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Capital 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, FTCS is a reasonable option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The SPDR S&P 500 ETF (SPY) and the Vanguard S&P 500 ETF (VOO) track a similar index. While SPDR S&P 500 ETF has $605.53 billion in assets, Vanguard S&P 500 ETF has $645.47 billion. SPY has an expense ratio of 0.09% and VOO charges 0.03%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.

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

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

Zacks Investment Research