First Trust Capital Strength ETF (FDV)

Overview

The First Trust Capital Strength ETF (FTCS) seeks to provide investment results that correspond generally to the price and yield (before the fund's fees and expenses) of an equity index called the Capital Strength Index. The fund primarily focuses on investing in companies with strong balance sheets. It aims for long-term growth by selecting fundamentally sound companies.

Reputation and Reliability

First Trust is a well-established ETF issuer with a strong track record and reputation for offering innovative investment solutions.

Management Expertise

First Trust has a team of experienced professionals who bring expertise in investment management and ETF operations.

Goal

To provide investment results that correspond generally to the price and yield of the Capital Strength Index.

Investment Approach and Strategy

Strategy: The fund tracks the Capital Strength Index, which selects companies based on fundamental factors and financial strength, primarily focusing on high free cash flow and low debt.

Composition The ETF predominantly holds common stocks of U.S. companies. It invests in a diversified range of sectors.

Market Share: The First Trust Capital Strength ETF holds a moderate market share within the smart beta ETF landscape.

Total Net Assets (AUM): 294548190

Key Competitors

• Invesco S&P 500 Quality ETF (SPHQ)
• iShares MSCI USA Quality Factor ETF (QUAL)
• VictoryShares US 500 Enhanced Volatility Wtd ETF (CFA)

Competitive Landscape

The smart beta ETF market is competitive, with several funds targeting similar investment strategies. FTCS differentiates itself by focusing on capital strength, but faces competition from larger, more established ETFs. FTCS's advantage lies in its specific focus on balance sheet strength, while disadvantages could be a smaller AUM and potentially lower liquidity compared to larger competitors.

Historical Performance: Historical performance data needs to be checked against a reliable source for accuracy.

Benchmark Comparison: Benchmark comparison needs to be checked against a reliable source for accuracy.

Expense Ratio: 0.57

Average Trading Volume

FTCS exhibits a moderate average trading volume, which suggests reasonable liquidity for most investors.

Bid-Ask Spread

The bid-ask spread is typically moderate, indicating relatively low trading costs.

Market Environment Factors

Economic growth, interest rates, and sector-specific trends influence FTCS's performance, particularly in sectors where capital strength is critical for weathering downturns.

Growth Trajectory

Growth trends are dependent on the overall market environment and the fund's ability to consistently select companies with strong balance sheets. Changes to strategy and holdings are infrequent but can occur based on index methodology adjustments.

Competitive Edge

FTCS's competitive edge lies in its distinct focus on capital strength, offering a targeted approach to smart beta investing. The emphasis on companies with high free cash flow and low debt can provide downside protection during market volatility. The fund's consistent application of the Capital Strength Index methodology can be appealing to investors seeking a rules-based approach. This targeted strategy makes it a unique offering in the crowded ETF market, differentiating it from broader quality or dividend-focused funds. However, the funds focus on the capital strength index may not preform well during economic expansion periods

Volatility

FTCS's volatility generally reflects the volatility of the broader equity market, but may be lower due to its focus on stable, financially strong companies.

Market Risk

FTCS is subject to market risk, including economic downturns and sector-specific declines. There is also risk associated with the fund's methodology, which may not always identify the best-performing companies.

Ideal Investor Profile

The ideal investor for FTCS is someone seeking long-term capital appreciation with a focus on companies exhibiting financial stability and resilience. Investors who are risk-averse and prefer companies with strong balance sheets would find this ETF suitable.

Market Risk

FTCS is suitable for long-term investors who prefer a blend of growth and stability. It's less appropriate for active traders seeking short-term gains or those primarily focused on high-growth opportunities.

The First Trust Capital Strength ETF (FTCS) offers exposure to companies with strong balance sheets, making it a potentially defensive investment within the equity market. It tracks the Capital Strength Index, employing a rules-based approach to select companies with high free cash flow and low debt. The ETF is suitable for long-term investors seeking capital appreciation and downside protection during volatile periods. While its expense ratio and liquidity are moderate, its distinct focus on financial strength differentiates it from broader market ETFs.

Data Sources:

• First Trust website
• ETF.com
• Morningstar
• Yahoo Finance

Disclaimers:

The data provided is for informational purposes only and should not be considered investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions. Market share information is estimated and may vary. Performance data is based on historical results and is not indicative of future performance.