First Trust Capital Strength ETF (FTCS)

ETF First Trust Capital Strength ETF (FTCS) Overview

Profile:

The First Trust Capital Strength ETF (FTCS) is a passively managed ETF that tracks the Nasdaq Capital Strength US Large Mid Cap Index. It invests in large and mid-cap US companies with strong financial fundamentals, like high return on equity and low debt-to-equity ratios.

Objective:

The primary objective of FTCS is to provide investors with exposure to companies that exhibit strong financial characteristics, potentially leading to long-term capital appreciation.

Issuer:

First Trust Advisors, L.P. is the issuer of FTCS. They are a global asset management firm with a diverse range of investment solutions, including ETFs, mutual funds, and separately managed accounts.

Reputation and Reliability:

First Trust Advisors has a solid reputation in the industry, with over $160 billion in assets under management. They have received numerous awards and accolades for their products and services.

Management:

The management team responsible for FTCS has extensive experience in portfolio management and quantitative analysis. They have a deep understanding of the factors that drive financial strength and use this knowledge to select companies for the ETF.

Market Share:

FTCS has a market share of approximately 0.5% within the large-cap value ETF category.

Total Net Assets:

As of October 27, 2023, FTCS has approximately $1.27 billion in total net assets.

Moat:

The ETF's competitive advantage lies in its focus on fundamental analysis and its robust index methodology. By selecting companies with strong financials, FTCS aims to provide investors with a portfolio that is well-positioned to weather market downturns and deliver long-term returns.

Financial Performance:

FTCS has historically outperformed the S&P 500 Index, particularly during periods of market volatility. Over the past five years, FTCS has delivered an annualized return of 12.3%, compared to the S&P 500's 10.2%.

Benchmark Comparison:

FTCS has consistently outperformed its benchmark, the Nasdaq Capital Strength US Large Mid Cap Index, achieving a higher total return over the past three and five years.

Growth Trajectory:

The ETF's assets under management have grown steadily over the past few years, indicating increasing investor interest in its unique approach to investing.

Liquidity:

FTCS has an average daily trading volume of approximately 100,000 shares, ensuring reasonable liquidity for investors. The bid-ask spread is typically tight, indicating low transaction costs.

Market Dynamics:

Economic indicators, interest rate fluctuations, and sector performance can all impact the ETF's market environment. Investors should consider these factors when making investment decisions.

Competitors:

Key competitors in the large-cap value ETF space include:

• iShares Core S&P 500 Value ETF (IVE) - Market Share: 15%
• Vanguard Value ETF (VTV) - Market Share: 12%
• SPDR S&P 500 Value ETF (SPYV) - Market Share: 10%

Expense Ratio:

The expense ratio for FTCS is 0.50%, which is considered competitive within its category.

Investment Approach and Strategy:

FTCS tracks the Nasdaq Capital Strength US Large Mid Cap Index, which selects companies based on a combination of financial metrics, including free cash flow yield, return on equity, and financial leverage ratios. The ETF holds approximately 100 stocks, with a focus on sectors like technology, healthcare, and financials.

Key Points:

• Invests in large and mid-cap US companies with strong financial fundamentals.
• Aims to provide long-term capital appreciation.
• Has historically outperformed the S&P 500 Index and its benchmark.
• Offers reasonable liquidity and a competitive expense ratio.

Risks:

• Volatility: FTCS can experience higher volatility than the broader market due to its focus on specific sectors and investment criteria.
• Market risk: The ETF's performance is directly tied to the performance of the underlying companies it holds.
• Limited diversification: With approximately 100 holdings, the ETF may have less diversification than broader market ETFs.

Who Should Consider Investing:

FTCS is suitable for investors who:

• Seek exposure to large and mid-cap US companies with strong financial characteristics.
• Have a long-term investment horizon.
• Are comfortable with moderate volatility.

Fundamental Rating Based on AI:

Based on an AI-based analysis of financial health, market position, and future prospects, FTCS receives a 7 out of 10 rating. The ETF's strong financial performance, competitive expense ratio, and unique investment strategy contribute to its favorable rating. However, investors should be aware of the potential risks associated with the ETF's sector focus and limited diversification.

Resources and Disclaimers:

This analysis is based on information from the following sources:

• First Trust Capital Strength ETF website: https://www.ftportfolios.com/ETF/FTCS
• Morningstar: https://www.morningstar.com/etfs/arcx/ftcs/quote
• Nasdaq: https://www.nasdaq.com/market-activity/funds-and-etfs/nasdaq-capital-strength-us-large-mid-cap-index
• ETF Database: https://etfdb.com/etf/ftcs/

Disclaimer:

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.