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Is First Trust Dow 30 Equal Weight ETF (EDOW) a Strong ETF Right Now?
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Launched on 08/08/2017, the First Trust Dow 30 Equal Weight ETF (EDOW - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
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
The fund is managed by First Trust Advisors. EDOW has been able to amass assets over $236.26 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Dow Jones Industrial Average Equal Weight Index.
The Dow Jones Industrial Average Equal Weight Index is an equally weighted index designed to be a price neutral version of the price-weighted DJIA.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.50%.
The fund has a 12-month trailing dividend yield of 1.84%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 20.70% of the portfolio. Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Caterpillar Inc. (CAT - Free Report) accounts for about 4.05% of the fund's total assets, followed by American Express Company (AXP - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) .
EDOW's top 10 holdings account for about 37.43% of its total assets under management.
Performance and Risk
So far this year, EDOW return is roughly 5.47%, and it's up approximately 18.32% in the last one year (as of 05/22/2024). During this past 52-week period, the fund has traded between $28.08 and $34.44.
EDOW has a beta of 0.92 and standard deviation of 14.31% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Dow 30 Equal Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $464.66 billion in assets, SPDR S&P 500 ETF has $527.50 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
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 30 Equal Weight ETF (EDOW) a Strong ETF Right Now?
Launched on 08/08/2017, the First Trust Dow 30 Equal Weight ETF (EDOW - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Blend 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
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
The fund is managed by First Trust Advisors. EDOW has been able to amass assets over $236.26 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Dow Jones Industrial Average Equal Weight Index.
The Dow Jones Industrial Average Equal Weight Index is an equally weighted index designed to be a price neutral version of the price-weighted DJIA.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.50%.
The fund has a 12-month trailing dividend yield of 1.84%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 20.70% of the portfolio. Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Caterpillar Inc. (CAT - Free Report) accounts for about 4.05% of the fund's total assets, followed by American Express Company (AXP - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) .
EDOW's top 10 holdings account for about 37.43% of its total assets under management.
Performance and Risk
So far this year, EDOW return is roughly 5.47%, and it's up approximately 18.32% in the last one year (as of 05/22/2024). During this past 52-week period, the fund has traded between $28.08 and $34.44.
EDOW has a beta of 0.92 and standard deviation of 14.31% for the trailing three-year period. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust Dow 30 Equal Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $464.66 billion in assets, SPDR S&P 500 ETF has $527.50 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
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.