Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the First Trust Growth Strength ETF (FTGS) is a smart beta exchange traded fund launched on 10/25/2022.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $1.27 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Growth. FTGS, before fees and expenses, seeks to match the performance of the THE GROWTH STRENGTH INDEX .
The Growth Strength Index provides exposure to a mix of domestic equities with filters for liquidity, return on equity, long-term debt, revenue and cash flow growth.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.60%, making it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.08%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FTGS, it has heaviest allocation in the Information Technology sector --about 28.5% of the portfolio --while Healthcare and Financials round out the top three.
Taking into account individual holdings, Fortinet, Inc. (FTNT) accounts for about 3.43% of the fund's total assets, followed by Palo Alto Networks, Inc. (PANW) and Cadence Design Systems, Inc. (CDNS).
The top 10 holdings account for about 25.31% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Growth Strength ETF return is roughly 6.02% so far, and was up about 8.35% over the last 12 months (as of 07/21/2026). FTGS has traded between $33.11 $38.18 in this past 52-week period.
FTGS has a beta of 1.02 and standard deviation of 16.27% for the trailing three-year period. With about 51 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Growth Strength ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth Index Fund ETF Shares (VUG) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ) tracks NASDAQ-100 Index. Vanguard Growth Index Fund ETF Shares has $221.28 billion in assets, Invesco QQQ has $464.02 billion. VUG has an expense ratio of 0.03% and QQQ changes 0.18%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth
Bottom Line
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First Trust Growth Strength ETF (FTGS): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).