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Is First Trust Dow Jones Global Select Dividend ETF (FGD) a Strong ETF Right Now?
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Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the First Trust Dow Jones Global Select Dividend ETF (FGD - Free Report) is a smart beta exchange traded fund launched on 11/21/2007.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
FGD is managed by First Trust Advisors, and this fund has amassed over $609.70 million, which makes it one of the average sized ETFs in the Broad Developed World ETFs. FGD, before fees and expenses, seeks to match the performance of the Dow Jones Global Select Dividend Index.
The Dow Jones Global Select Dividend 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 5.11%.
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.
Taking into account individual holdings, Labrador Iron Ore Royalty Corp, (LIF.CN) accounts for about 1.86% of the fund's total assets, followed by Meritz Securities Co,, Ltd, (008560.KS) and Enagas S,a, (ENG.SM).
FGD's top 10 holdings account for about 16.26% of its total assets under management.
Performance and Risk
The ETF has added about 3.83% and is up about 17.29% so far this year and in the past one year (as of 02/16/2022), respectively. FGD has traded between $23.59 and $27.47 during this last 52-week period.
The ETF has a beta of 0.98 and standard deviation of 24.86% for the trailing three-year period, making it a low risk choice in the space. With about 98 holdings, it effectively diversifies company-specific risk.
Alternatives
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 - Free Report) tracks MSCI All Country World Index and the Vanguard Total World Stock ETF (VT - Free Report) tracks FTSE Global All Cap Index. IShares MSCI ACWI ETF has $19.01 billion in assets, Vanguard Total World Stock ETF has $25.14 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.
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 Dow Jones Global Select Dividend ETF (FGD) a Strong ETF Right Now?
Designed to provide broad exposure to the Broad Developed World ETFs category of the market, the First Trust Dow Jones Global Select Dividend ETF (FGD - Free Report) is a smart beta exchange traded fund launched on 11/21/2007.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
FGD is managed by First Trust Advisors, and this fund has amassed over $609.70 million, which makes it one of the average sized ETFs in the Broad Developed World ETFs. FGD, before fees and expenses, seeks to match the performance of the Dow Jones Global Select Dividend Index.
The Dow Jones Global Select Dividend 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 5.11%.
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.
Taking into account individual holdings, Labrador Iron Ore Royalty Corp, (LIF.CN) accounts for about 1.86% of the fund's total assets, followed by Meritz Securities Co,, Ltd, (008560.KS) and Enagas S,a, (ENG.SM).
FGD's top 10 holdings account for about 16.26% of its total assets under management.
Performance and Risk
The ETF has added about 3.83% and is up about 17.29% so far this year and in the past one year (as of 02/16/2022), respectively. FGD has traded between $23.59 and $27.47 during this last 52-week period.
The ETF has a beta of 0.98 and standard deviation of 24.86% for the trailing three-year period, making it a low risk choice in the space. With about 98 holdings, it effectively diversifies company-specific risk.
Alternatives
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 - Free Report) tracks MSCI All Country World Index and the Vanguard Total World Stock ETF (VT - Free Report) tracks FTSE Global All Cap Index. IShares MSCI ACWI ETF has $19.01 billion in assets, Vanguard Total World Stock ETF has $25.14 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.
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.