Although First Trust hasn't said as much, it's also possible that it made the conversion after deciding that the original fund's lack of assets -- $37 million -- indicated the market didn't need another basic large-cap value fund.
Although the capital strength process yields a value tilt, it is not a carbon copy of other large-cap value funds offered by competitors.
The iShares S&P 500 Value ETF (IVE), the Power Shares Dynamic Large Cap Value Portfolio (PWV) and the Vanguard Mega Cap Value ETF (MGV) all have weightings greater than 20% in the financial sector compared to just 8% for FTCS. The other funds have much less exposure to the industrial sector than FTCS.
Since FTCS started trading in its current incarnation these differences have not mattered because all four of these funds have traded in lockstep. Historically the industrial sector tends to decline more than the broad market during the bear phase of the cycle and then bounces back more than the broad market in new bull markets.Although First Trust seeks to offer a fund that is more resilient to bear market declines, the fund may not in fact do that if it still has its heaviest weighting in the industrial sector when the next large decline comes. At the time of publication, Nusbaum had no positions in securities mentioned. Follow @randomroger This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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