The First Trust Large Cap Growth AlphaDEX ETF (FTC) is a smart beta ETF offering exposure to the Large Cap Growth sector. Smart beta ETFs differ from traditional market cap-weighted indexes by employing unique stock selection methods aimed at improving risk-return performance.
FTC, managed by First Trust Advisors, seeks to replicate the performance of the Nasdaq AlphaDEX Large Cap Growth Index. This ETF has over $1.27 billion in assets, categorising it as an average-sized fund within its segment. It has an expense ratio of 0.58% annually, higher than some peers.
Sector Allocation and Top Holdings
The fund’s sector allocation consists of 26.3% in Information Technology, followed by Industrials and Consumer Discretionary. Coherent Corp., Alphabet Inc., and Vertiv Holdings Co are among its top holdings. These top 10 holdings represent around 10.95% of the fund’s assets.
FTC has achieved a return of 1.29% this year and 16.96% over the past year until early January 2026. It has traded between $116.97 and $164.79 in the last 52 weeks. The fund’s beta is 1.13 with a standard deviation of 17.66%, marking it as medium risk. Alternatives such as Vanguard Growth ETF and Invesco QQQ present different risk profiles and costs within this segment.
Given its beta of 1.13, this ETF is slightly more volatile than the broader market, which presents opportunities for options traders. With the VIX having settled around 14 for much of the fourth quarter of 2025, options premiums are not excessively high, making it a reasonable time to establish new positions. The fund’s “smart beta” strategy means it may diverge from passive indexes, creating unique trading scenarios based on its specific stock-selection methodology.
The current macro environment appears favorable for growth-oriented funds like this one. After the Federal Reserve held rates steady through all of 2025, minutes from the December meeting showed a growing discussion about a potential rate cut later in 2026, which would act as a tailwind for technology and other growth sectors. We saw a brief rally on this news in the final weeks of last year, and any positive inflation data in the coming weeks could accelerate that trend.
Considering Market Conditions
However, we must consider the fund’s heavy allocation to Industrials and Consumer Discretionary sectors, which face some near-term headwinds. The latest ISM Manufacturing PMI data released for December 2025 registered at 49.1, indicating a slight contraction in the industrial sector. Furthermore, reports from the National Retail Federation showed that 2025 holiday sales growth was a modest 3.6%, suggesting the consumer may be losing momentum.
Looking back at 2025, we note that while FTC’s return was respectable, it underperformed the NASDAQ-100. The QQQ, a major benchmark, gained over 22% in 2025, driven by a handful of mega-cap tech stocks that dominate its market-cap-weighted index. This suggests a potential pairs trading strategy, where traders could bet on the performance gap between FTC and QQQ either closing or widening in the coming weeks.
The fund’s diversified nature, with its top ten holdings making up only about 11% of assets, dampens the impact of any single stock’s earnings report. With earnings season for the fourth quarter of 2025 set to begin, traders should watch the implied volatility of options on FTC. This could be a cost-effective way to trade the broader sentiment in the large-cap growth space without taking on the concentrated risk of holding options on individual names like Alphabet.
