Exploring the First Trust Growth Strength ETF: A Smart Beta Investment Option
Launched on 10/25/2022, the First Trust Growth Strength ETF (FTGS) offers broad exposure to the Style Box – Large Cap Growth category. This smart beta exchange-traded fund provides an alternative to traditional investing methods.
Understanding Smart Beta ETFs
Market cap weighted indexes aim to mirror the overall market or specific market segments. Historically, the ETF industry has favored products based on this simple strategy.
Investors who trust the market’s efficiency may prefer market cap indexes since they provide a low-cost, transparent way to achieve market returns. On the other hand, if you look to outperform the market through careful stock selection, smart beta funds like FTGS serve as an effective choice. This category focuses on non-cap weighted strategies.
By selecting stocks based on fundamental characteristics or a mix of such factors, these non-cap weighted indexes aim to enhance risk-return performance. Various methodologies exist within smart beta options, including equal-weighting and fundamental weighting, although not all have achieved superior investment results.
Fund Sponsorship and Index Performance
Sponsored by First Trust Advisors, FTGS has gathered assets exceeding $772.63 million, placing it within the average size range for ETFs in the Style Box – Large Cap Growth segment. Before accounting for fees and expenses, FTGS seeks to match the performance of THE GROWTH STRENGTH INDEX.
This index provides exposure to a mix of domestic equities, applying filters based on liquidity, return on equity, long-term debt, revenue, and cash flow growth.
Fees and Expenses
When selecting an ETF, cost is a crucial factor, as lower-cost funds can outperform more expensive alternatives when all other aspects are equal.
This ETF has annual operating expenses of 0.60%, aligning with many peer products in the industry. Additionally, FTGS offers a 12-month trailing dividend yield of 0.33%.
Sector Distribution and Major Holdings
While ETFs offer diversified exposure, examining a fund’s holdings is essential before investing. Fortunately, FTGS provides transparency by disclosing its holdings daily.
This fund is heavily weighted toward the Information Technology sector, which makes up approximately 29.80% of the portfolio, followed by Financials and Industrials.
Within its holdings, Renaissancere Holdings Ltd. (RNR) comprises about 2.38% of its total assets, with Meta Platforms Inc. (class A) (META) and ServiceNow, Inc. (NOW) following closely. Collectively, the top 10 holdings represent about 22.52% of its total assets.
Performance and Risk Analysis
The FTGS ETF has achieved a gain of about 16.44% this year and an approximate increase of 36.11% over the past year, as of 10/23/2024. Throughout the past 52 weeks, it traded between $22.83 and $32.16.
With a beta of 1.11 and a standard deviation of 16.05% over the last three years, the fund effectively diversifies company-specific risks with its 51 holdings.
Alternative Investment Options
For those interested in surpassing the Style Box – Large Cap Growth segment, FTGS represents a strong choice. Nevertheless, other ETFs within this space warrant consideration.
Both the Vanguard Growth ETF (VUG) and the Invesco QQQ (QQQ) are notable alternatives, with VUG tracking the CRSP U.S. Large Cap Growth Index and QQQ following the NASDAQ-100 Index. VUG has assets totaling $143.97 billion, while Invesco QQQ manages $301.03 billion. VUG charges a low expense ratio of 0.04%, compared to QQQ’s 0.20%.
For those seeking lower-risk and cost-efficient investment options, traditional market cap-weighted ETFs might be worthwhile to achieve returns in the same market category.
Conclusion
For further information about the FTGS ETF and other investment opportunities, consider filtering products that align with your objectives. Additionally, explore recent articles on developments in the world of ETFs at Zacks ETF Center.
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First Trust Growth Strength ETF (FTGS): ETF Research Reports
RenaissanceRe Holdings Ltd. (RNR): Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
ServiceNow, Inc. (NOW): Free Stock Analysis Report
Vanguard Growth ETF (VUG): ETF Research Reports
Meta Platforms, Inc. (META): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
