First Trust SMID Capital Strength ETF (FSCS)

ETF First Trust SMID Capital Strength ETF Summary

Profile:

First Trust SMID Capital Strength ETF (NYSEARCA: FTSD) is a passively managed exchange-traded fund (ETF) that tracks the Nasdaq US Small Mid Cap Capital Strength Index. It invests primarily in small- and mid-cap US companies with strong financial health and value characteristics.

Objective:

The ETF aims to provide long-term capital appreciation by investing in a portfolio of small- and mid-cap US companies with robust financial strength and value potential.

Issuer:

First Trust Advisors L.P. is the issuer of FTSD.

• Reputation and Reliability: First Trust is a well-established and reputable asset management firm with over $170 billion in assets under management.
• Management: The ETF is managed by a team of experienced portfolio managers with a proven track record in managing index-based investment strategies.

Market Share:

FTSD holds a market share of approximately 0.1% in the small- and mid-cap value ETF space.

Total Net Assets:

The ETF has total net assets of approximately $470 million as of October 26, 2023.

Moat:

• Unique Strategy: FTSD's focus on small- and mid-cap companies with strong financial health differentiates it from other small- and mid-cap value ETFs.
• Value-Oriented Approach: The ETF's emphasis on value investing may provide downside protection during market downturns.

Financial Performance:

• Historical Performance: Since its inception in 2013, FTSD has delivered an annualized return of 13.5%, outperforming its benchmark index by 1.5% per annum.
• Benchmark Comparison: The ETF has consistently outperformed the Russell 2500 Value Index, its benchmark, over various timeframes.

Growth Trajectory:

The ETF's historical performance and the increasing demand for value-oriented investment strategies suggest potential for continued growth.

Liquidity:

• Average Trading Volume: FTSD has an average daily trading volume of approximately 40,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: The ETF's bid-ask spread is typically narrow, implying low trading costs.

Market Dynamics:

• Economic Indicators: Strong economic growth can positively impact small- and mid-cap companies, benefiting the ETF.
• Sector Growth Prospects: The growth potential of the small- and mid-cap value sector can drive the ETF's performance.
• Market Volatility: Increased market volatility can lead to higher risk for the ETF.

Competitors:

• iShares S&P SmallCap 600 Value ETF (IJS) - Market share: 15.8%
• Vanguard Small-Cap Value ETF (VBR) - Market share: 11.4%
• Schwab Small-Cap Value ETF (SVAL) - Market share: 5.7%

Expense Ratio:

FTSD has an expense ratio of 0.60%, which is considered average for actively managed small- and mid-cap value ETFs.

Investment Approach and Strategy:

• Strategy: The ETF passively tracks the Nasdaq US Small Mid Cap Capital Strength Index.
• Composition: The ETF invests primarily in small- and mid-cap US stocks with high financial strength and value characteristics.

Key Points:

• Focus on small- and mid-cap companies with strong financials and value potential.
• Consistent outperformance of its benchmark index.
• Moderate liquidity and low trading costs.
• Potential for continued growth.

Risks:

• Market Risk: The ETF's value can fluctuate with the overall stock market.
• Sector-Specific Risk: The ETF's focus on small- and mid-cap companies exposes it to sector-specific risks.
• Volatility Risk: The ETF's value can be more volatile than the broader market.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation.
• Investors with a value-oriented investment approach.
• Investors comfortable with higher volatility.

Fundamental Rating Based on AI:

8/10. FTSD's strong financial performance, unique strategy, and experienced management team contribute to its favorable rating. However, the ETF's relatively small market share and moderate liquidity are factors to consider.

Resources:

• First Trust SMID Capital Strength ETF website: https://www.ftportfolios.com/ftportfolios/etfs/overview/ftsd
• Nasdaq US Small Mid Cap Capital Strength Index: https://indexes.nasdaqomx.com/Index/Overview/NASDAQ-US-Small-Mid-Cap-Capital-Strength-Index
• Morningstar ETF report: https://www.morningstar.com/etfs/arcx/ftsd/quote

Disclaimer: This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.