About the Zacks ETF Rank
The Zacks ETF Rank provides a recommendation for the ETF in the context of our outlook for the underlying industry, sector, style box, or asset class.
The aim of our model is to select the best ETFs within each risk category. We assign each ETF one of five ranks within each risk bucket. Thus, the Zacks Rank reflects the expected return of an ETF relative to other products with a similar level of risk.
For investors seeking to apply this methodology to their portfolio in the large cap growth sector, we have taken a closer look at the top ranked FTC, which has a Zacks ETF Rank of 1 or Strong Buy with a ‘medium risk’ level. The details are highlighted below (see all the Large Cap ETFs here).
First Trust Large Cap Growth AlphaDEX Fund (NYSEARCA:FTC)
Launched in May 2007, FTC manages an asset base of $285.1 million and seeks to track the performance of the Defined Large Cap Growth Index before fees and expenses.
The index employs AlphaDEX methodology, wherein companies are assigned scores on certain growth and value factors. The stocks which receive the highest growth scores are eligible for inclusion in the Defined Large Cap Growth Index.
The fund holds a basket of 176 stocks and is pretty well diversified among its individual holdings. None of the stocks form more than 1.5% of the total assets and the top ten stocks form merely around 11% of the fund assets. Actavis plc (1.21%), Harman International Industries (1.18%) and Delta Air Lines (1.14%) are the top three holdings of the fund.
Sector wise, Consumer Discretionary (26.38%) dominates the fund, followed by Industrials (19.9%) and Information Technology (16.7%). Meanwhile, as far as expenses are concerned, the fund is an expensive choice in its category, charging investors 70 basis points a year.
However, the charges seem to be justified given the fund’s performance. The fund performed quite well last year, returning a stellar 37.71%. Also, the fund is up 5% since the start of the year.
Given the ongoing recovery in the U.S. markets, FTC is surely a great choice for investors seeking exposure to large cap growth stocks. Also, given its favorable rank, FTC is expected to outperform in the near future (read: Best ETF Strategies for 2014).
Though slightly pricey when compared to other choices in the space, it shouldn’t bother investors much, considering its performance history of late. So, investors can surely consider adding this product to their portfolio to boost returns.
This article is brought to you courtesy of Eric Dutram.