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Is First Trust STOXX European Select Dividend ETF (FDD) a Strong ETF Right Now?
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The First Trust STOXX European Select Dividend ETF (FDD - Free Report) was launched on 08/27/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the European Equity ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $232.89 million, this makes it one of the average sized ETFs in the European Equity ETFs. FDD is managed by First Trust Advisors. Before fees and expenses, FDD seeks to match the performance of the STOXX Europe Select Dividend 30 Index.
The STOXX Europe Select Dividend 30 Index consists of 30 high dividend-yielding securities selected from the STOXX Europe 600 Index.
Cost & Other Expenses
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 cousins, other things remaining the same.
Annual operating expenses for FDD are 0.58%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.45%.
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.
Looking at individual holdings, Standard Life Aberdeen Plc (SLA.LN) accounts for about 6.38% of total assets, followed by Legal & General Group Plc (LGEN.LN) and Ubs Group Ag (UBSG.SW).
The top 10 holdings account for about 47.31% of total assets under management.
Performance and Risk
So far this year, FDD has added roughly 11.72%, and it's up approximately 56.85% in the last one year (as of 04/09/2021). During this past 52-week period, the fund has traded between $8.98 and $14.56.
The fund has a beta of 1.01 and standard deviation of 25.42% for the trailing three-year period, which makes FDD a medium risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust STOXX European Select Dividend ETF is not a suitable option for investors seeking to outperform the European Equity ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares MSCI Eurozone ETF (EZU - Free Report) tracks MSCI EMU Index and the Vanguard FTSE Europe ETF (VGK - Free Report) tracks FTSE Developed Europe All Cap Index. IShares MSCI Eurozone ETF has $5.25 billion in assets, Vanguard FTSE Europe ETF has $15.82 billion. EZU has an expense ratio of 0.51% and VGK charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the European Equity ETFs.
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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Is First Trust STOXX European Select Dividend ETF (FDD) a Strong ETF Right Now?
The First Trust STOXX European Select Dividend ETF (FDD - Free Report) was launched on 08/27/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the European Equity ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $232.89 million, this makes it one of the average sized ETFs in the European Equity ETFs. FDD is managed by First Trust Advisors. Before fees and expenses, FDD seeks to match the performance of the STOXX Europe Select Dividend 30 Index.
The STOXX Europe Select Dividend 30 Index consists of 30 high dividend-yielding securities selected from the STOXX Europe 600 Index.
Cost & Other Expenses
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 cousins, other things remaining the same.
Annual operating expenses for FDD are 0.58%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.45%.
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.
Looking at individual holdings, Standard Life Aberdeen Plc (SLA.LN) accounts for about 6.38% of total assets, followed by Legal & General Group Plc (LGEN.LN) and Ubs Group Ag (UBSG.SW).
The top 10 holdings account for about 47.31% of total assets under management.
Performance and Risk
So far this year, FDD has added roughly 11.72%, and it's up approximately 56.85% in the last one year (as of 04/09/2021). During this past 52-week period, the fund has traded between $8.98 and $14.56.
The fund has a beta of 1.01 and standard deviation of 25.42% for the trailing three-year period, which makes FDD a medium risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust STOXX European Select Dividend ETF is not a suitable option for investors seeking to outperform the European Equity ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares MSCI Eurozone ETF (EZU - Free Report) tracks MSCI EMU Index and the Vanguard FTSE Europe ETF (VGK - Free Report) tracks FTSE Developed Europe All Cap Index. IShares MSCI Eurozone ETF has $5.25 billion in assets, Vanguard FTSE Europe ETF has $15.82 billion. EZU has an expense ratio of 0.51% and VGK charges 0.08%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the European Equity ETFs.
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.