The First Trust Dow Jones Global Select Dividend ETF (
FGD Quick Quote FGD - Free Report) made its debut on 11/21/2007, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs category of the market. What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by First Trust Advisors, FGD has amassed assets over $555.74 million, making it one of the average sized ETFs in the Broad Developed World ETFs. Before fees and expenses, FGD seeks to match the performance of the Dow Jones Global Select Dividend Index.
This Index is an indicated annual dividend yield weighted index of 100 stocks selected from the developed-market portion of the Dow Jones World Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.57% for FGD, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 4.19%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Labrador Iron Ore Royalty Corp. (LIF.CN) accounts for about 2.18% of the fund's total assets, followed by Fortescue Metals Group Limited (FMG.AU) and Enagas S.a. (ENG.SM).
FGD's top 10 holdings account for about 16.37% of its total assets under management.
Performance and Risk
The ETF has added roughly 21.27% so far this year and is up about 45.97% in the last one year (as of 07/30/2021). In the past 52-week period, it has traded between $17.49 and $27.47.
The fund has a beta of 1.05 and standard deviation of 25.06% for the trailing three-year period, which makes FGD a low risk choice in this particular space. With about 98 holdings, it effectively diversifies company-specific risk.
First Trust Dow Jones Global Select Dividend ETF is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares MSCI ACWI ETF (
ACWI Quick Quote ACWI - Free Report) tracks MSCI All Country World Index and the Vanguard Total World Stock ETF ( VT Quick Quote VT - Free Report) tracks FTSE Global All Cap Index. IShares MSCI ACWI ETF has $17.09 billion in assets, Vanguard Total World Stock ETF has $22.13 billion. ACWI has an expense ratio of 0.32% and VT 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 Broad Developed World ETFs.
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.