First Trust Capital Strength UCITS ETF

Issuer: First Trust

Asset Class: Equity

TER: 60bps

Trading Currency: USD

Pays Income: False

Listing Date: 30 Jan 2020

Ticker: FTCS

ISIN: IE00BL0L0D23

This investment product offers a systematic, actively managed approach to U.S. large-cap equities, focusing on companies with exceptional financial strength. The strategy begins by screening a universe of U.S.-listed stocks to identify businesses that possess robust balance sheets, characterized by having at least $1 billion in cash or equivalents, a long-term debt to market capitalization ratio below 30%, and a return on equity greater than 15%. This rigorous, rules-based process is designed to isolate fundamentally sound companies that may be better positioned to navigate various market conditions.

From this pre-qualified list of financially strong companies, the portfolio is constructed by selecting the 50 stocks that have demonstrated the lowest price volatility over the preceding 52 weeks. These final 50 holdings are then equally weighted. This dual focus on both balance sheet quality and low volatility aims to create a more defensive equity portfolio that may exhibit resilience during periods of market stress. The equal-weighting methodology also helps to diversify risk across the holdings, preventing over-concentration in any single company.

This fund is designed for investors seeking a core allocation to the U.S. stock market but who wish to do so with a potentially lower risk profile than a traditional market-cap-weighted index. The emphasis on 'capital strength' makes it a suitable option for those who prioritize capital preservation and believe that high-quality, stable companies are likely to generate attractive risk-adjusted returns over a full market cycle. It can serve as a strategic holding for individuals looking to access the growth potential of U.S. equities while mitigating some of the associated volatility.