Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the First Trust Large Cap Value AlphaDEX ETF (FTA), a passively managed exchange traded fund launched on 05/08/2007.

The fund is sponsored by First Trust Advisors. It 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.

Why Large Cap Value

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.59%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 2.17%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 24.90% of the portfolio. Industrials and Utilities round out the top three.

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 account for about 10.38% of total assets under management.

Performance and Risk

FTA seeks to match the performance of the Nasdaq AlphaDEX Large Cap Value Index before fees and expenses. 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.

The ETF has added about 3.29% so far this year and it's up approximately 9.20% in the last one year (as of 09/19/2023). In the past 52-week period, it has traded between $57.68 and $73.30.