Launched on 07/06/2006, the First Trust Capital Strength ETF (FTCS) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $7.66 billion, making it one of the largest ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the The Capital Strength Index.
The Capital Strength Index is an equal-dollar weighted index which provides exposure to well-capitalized companies with strong market positions based on strong balance sheets, high degree of liquidity, ability to generate earnings growth & record financial strength & profit 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.
Operating expenses on an annual basis are 0.53% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.10%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FTCS, it has heaviest allocation in the Financials sector --about 23.5% of the portfolio --while Industrials and Consumer Staples round out the top three.
Looking at individual holdings, Eog Resources, Inc. (EOG) accounts for about 2.79% of total assets, followed by Ross Stores, Inc. (ROST) and Linde Plc (LIN).
FTCS's top 10 holdings account for about 23.27% of its total assets under management.
Performance and Risk
The ETF has added about 1.8% so far this year and is up roughly 4.9% in the last one year (as of 06/25/2026). In the past 52-week period, it has traded between $89.72 and $99.44
FTCS has a beta of 0.71 and standard deviation of 11.02% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk .
Alternatives
First Trust Capital Strength ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
iShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the Vanguard 500 Index Fund ETF Shares (VOO) tracks S&P 500 Index. iShares Core S&P 500 ETF has $823.58 billion in assets, Vanguard 500 Index Fund ETF Shares has $965.43 billion. IVV has an expense ratio of 0.03% and VOO changes 0.03%.
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 Blend
Bottom Line
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First Trust Capital Strength ETF (FTCS): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).