First Trust Growth Strength ETF: A Look at Its Performance and Strategy

Launched on October 25, 2022, the First Trust Growth Strength ETF (FTGS) aims to provide broad exposure to the Style Box – Large Cap Growth segment of the market. This smart beta exchange-traded fund (ETF) seeks to offer investors an alternative to traditional market capitalization-weighted funds.

Understanding Smart Beta ETFs

Smart beta ETFs differ from conventional funds that typically rely on market-cap weighted indexes. These traditional ETFs are cost-effective and provide market returns with transparency.

However, some investors believe that active stock selection can lead to better performance. This belief gives rise to smart beta funds, which pursue non-cap weighted strategies. These indexes focus on selecting stocks based on fundamental characteristics like liquidity, return on equity, and growth in revenue and cash flow.

Investors can choose from several methodologies, including equal weighting, fundamental weighting, and volatility or momentum-based strategies, although results can vary considerably across these approaches.

Fund Management and Index Overview

First Trust Advisors manages the FTGS, which has successfully built an asset base of over $1.03 billion, placing it within the average size for ETFs in the Style Box – Large Cap Growth category. The ETF seeks to match the performance of the Growth Strength Index.

This index encompasses domestic equities, applying filters for criteria such as liquidity, return on equity, and growth metrics.

Costs and Expenses

Investors should pay close attention to an ETF’s expense ratio, as lower-cost funds tend to outperform more expensive options when other factors are equal. FTGS carries annual operating expenses of 0.60%, which is relatively high compared to peers.

The fund’s 12-month trailing dividend yield is approximately 0.39%.

Sector Exposure and Leading Holdings

While ETFs offer diversified exposure, it’s crucial to review the individual holdings. FTGS provides transparency by disclosing its holdings daily. The fund allocates 25.20% of its portfolio to the Financials sector, with Information Technology and Industrials rounding out the top three sectors.

Among its holdings, Interactive Brokers Group, Inc. (class A) (IBKR) constitutes about 2.44% of total assets, followed by Netflix, Inc. (NFLX) and Meta Platforms Inc. (class A) (META). Notably, the top ten holdings represent roughly 22.88% of the fund’s total assets under management.

Performance and Risk Assessment

Year-to-date, the First Trust Growth Strength ETF has registered a slight decline of approximately -0.22%. Over the past 12 months, it has gained around 6.51% as of March 3, 2025. The ETF’s trading range over the 52-week period has been between $28.64 and $33.31.

With a beta of 1.16 and a standard deviation of 15.73% over the last three years, FTGS diversifies company-specific risks across about 51 holdings.

Exploring Alternatives

For those looking to excel in the Style Box – Large Cap Growth sector, FTGS is a viable option, but other ETFs are also available. The Vanguard Growth ETF (VUG) tracks the CRSP U.S. Large Cap Growth Index, while the Invesco QQQ (QQQ) follows the NASDAQ-100 Index. VUG has assets of $153.57 billion, and QQQ boasts $318.45 billion. Notably, VUG has a low expense ratio of 0.04%, whereas QQQ charges 0.20%.

Investors might also consider traditional market-cap weighted ETFs seeking to match the returns of the Style Box – Large Cap Growth for lower-cost alternatives.

Conclusion

To further explore the First Trust Growth Strength ETF and other ETFs, investors should use screening tools that align with their financial goals and stay updated through research articles on the latest trends in the ETF landscape.

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First Trust Growth Strength ETF (FTGS): ETF Research Reports

Netflix, Inc. (NFLX): Free Stock Analysis Report

Interactive Brokers Group, Inc. (IBKR): Free Stock Analysis Report

Invesco QQQ (QQQ): ETF Research Reports

Vanguard Growth ETF (VUG): ETF Research Reports

Meta Platforms, Inc. (META): Free Stock Analysis Report

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.