Exploring the First Trust Large Cap Value AlphaDEX ETF (FTA) for US Equity Market Exposure

In the fast-paced world of finance, where every decision can make or break a portfolio, investors are constantly on the lookout for opportunities to gain exposure to different segments of the market. One such opportunity that has been gaining traction is the First Trust Large Cap Value AlphaDEX ETF (FTA), a passively managed exchange traded fund that offers broad exposure to the Large Cap Value segment of the US equity market.

Launched on 05/08/2007, the FTA ETF is sponsored by First Trust Advisors and has amassed assets over $1.19 billion, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market. But why should investors consider large cap value stocks in the first place?

Companies that fall into the large cap category typically have a market capitalization above $10 billion. These companies are considered more stable options, boasting more predictable cash flows and less volatility compared to their mid and small cap counterparts. While value stocks may have lower price-to-earnings and price-to-book ratios, they also tend to have lower sales and earnings growth rates. However, when looking at long-term performance, value stocks have outperformed growth stocks in nearly all markets.

In terms of costs, expense ratios play a crucial role in the return of an ETF. In the case of the FTA ETF, the annual operating expenses are 0.59%, making it one of the more expensive products in the space. However, it does offer a 12-month trailing dividend yield of 2.17%.

Sector exposure and top holdings are also important factors to consider when investing in an ETF. The FTA ETF has the heaviest allocation to the Financials sector, accounting for about 24.90% of the portfolio. Industrials and Utilities round out the top three sectors. When looking at individual holdings, Pultegroup, Inc. (PHM) accounts for about 1.18% of total assets, followed by D.r. Horton, Inc. (DHI) and Lennar Corporation (LEN). The top 10 holdings make up about 10.38% of total assets under management.

In terms of performance and risk, the FTA ETF seeks to match the performance of the Nasdaq AlphaDEX Large Cap Value Index before fees and expenses. It has added about 3.29% so far this year and is up approximately 9.20% in the last one year. The ETF has a beta of 1.13 and a standard deviation of 18.32% for the trailing three-year period, making it a medium risk choice in the space with about 188 holdings to effectively diversify company-specific risk.

While the FTA ETF carries a Zacks ETF Rank of 3 (Hold), investors might also want to consider some other ETF options in the space such as the iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) which track a similar index. The iShares Russell 1000 Value ETF has $50.54 billion in assets with an expense ratio of 0.19%, while the Vanguard Value ETF has $101.60 billion in assets and charges 0.04%.

In conclusion, the First Trust Large Cap Value AlphaDEX ETF (FTA) offers investors an opportunity to gain exposure to the Large Cap Value segment of the US equity market. While it may have higher expenses compared to some of its counterparts, the ETF provides a diversified portfolio with a focus on large cap value stocks. As investors continue to seek out low-cost, transparent, and tax-efficient investment options, passively managed ETFs like FTA remain an attractive choice for long-term investors.

For more information on this product and other ETFs, investors can visit the Zacks ETF Center to screen for products that match their investment objectives and stay informed on the latest developments in the ETF investing universe. To read more about the First Trust Large Cap Value AlphaDEX ETF (FTA) and other investment opportunities, visit Zacks.com for in-depth analysis and research reports.

In the ever-evolving landscape of finance, where every decision counts, the First Trust Large Cap Value AlphaDEX ETF (FTA) stands out as a compelling option for investors looking to gain exposure to the Large Cap Value segment of the US equity market. With its focus on stability, predictability, and long-term performance, the FTA ETF offers a strategic opportunity for investors seeking to diversify their portfolios and navigate the complexities of the market with confidence.