Launched on 05/08/2007, the First Trust Large Cap Growth AlphaDEX ETF (FTC) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
FTC is managed by First Trust Advisors, and this fund has amassed over $1.19 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. FTC seeks to match the performance of the Nasdaq AlphaDEX Large Cap Growth Index before fees and expenses.
The NASDAQ AlphaDEX Large Cap Growth Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Growth Index.
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 0.58% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.35%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Financials sector - about 20.8% of the portfolio. Information Technology and Industrials round out the top three.
When you look at individual holdings, Robinhood Markets, Inc. (class A) (HOOD) accounts for about 1.47% of the fund's total assets, followed by Roblox Corporation (class A) (RBLX) and Carvana Co. (class A) (CVNA).
Its top 10 holdings account for approximately 11.91% of FTC's total assets under management.
Performance and Risk
So far this year, FTC return is roughly 8.83%, and was up about 23.09% in the last one year (as of 07/03/2025). During this past 52-week period, the fund has traded between $115.51 and $150.97.
FTC has a beta of 1.11 and standard deviation of 18.68% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 188 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Large Cap Growth AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ) tracks NASDAQ-100 Index. Vanguard Growth ETF has $173.93 billion in assets, Invesco QQQ has $353.41 billion. VUG has an expense ratio of 0.04% and QQQ changes 0.20%.
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 Growth
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 Large Cap Growth AlphaDEX ETF (FTC): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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