Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the First Trust Large Cap Value AlphaDEX ETF (FTA) is a smart beta exchange traded fund launched on 05/08/2007.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by First Trust Advisors. FTA has been able to amass assets over $1.14 billion, making it one of the average sized ETFs in the Style Box - Large Cap Value. FTA, before fees and expenses, seeks to match the performance of the Nasdaq AlphaDEX Large Cap Value Index.
The NASDAQ AlphaDEX Large Cap Value Index is an enhanced index which employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 500 Large Cap Value Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.58% for FTA, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 2.02%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For FTA, it has heaviest allocation in the Financials sector --about 16.20% of the portfolio --while Energy and Utilities round out the top three.
When you look at individual holdings, Cvs Health Corporation (CVS) accounts for about 1.07% of the fund's total assets, followed by Delta Air Lines, Inc. (DAL) and Nucor Corporation (NUE).
FTA's top 10 holdings account for about 9.77% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Large Cap Value AlphaDEX ETF has added about 0.04% so far, and was up about 7.36% over the last 12 months (as of 03/06/2025). FTA has traded between $72.36 and $83.49 in this past 52-week period.
The fund has a beta of 1.07 and standard deviation of 16.64% for the trailing three-year period, which makes FTA a medium risk choice in this particular space. With about 189 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Large Cap Value AlphaDEX ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $69.23 billion in assets, Vanguard Value ETF has $133.60 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
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 Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Get it free >>First Trust Large Cap Value AlphaDEX ETF (FTA): ETF Research Reports
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
Nucor Corporation (NUE) : Free Stock Analysis Report
CVS Health Corporation (CVS) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
Schwab U.S. Dividend Equity ETF (SCHD): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
