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Is First Trust Dow 30 Equal Weight ETF (EDOW) a Strong ETF Right Now?

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The First Trust Dow 30 Equal Weight ETF (EDOW - Free Report) was launched on 08/08/2017, and is a smart beta exchange traded fund designed to offer 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.

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.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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

EDOW is managed by First Trust Advisors, and this fund has amassed over $236.53 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Blend. Before fees and expenses, EDOW 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

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 0.50% for EDOW, making it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 1.59%.

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.

Representing 19.50% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Financials and Industrials round out the top three.

Looking at individual holdings, The Boeing Company (BA - Free Report) accounts for about 3.66% of total assets, followed by Apple Inc. (AAPL - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) .

The top 10 holdings account for about 34.42% of total assets under management.

Performance and Risk

So far this year, EDOW has gained about 4.38%, and was up about 15.89% in the last one year (as of 02/07/2025). During this past 52-week period, the fund has traded between $32.70 and $38.06.

The ETF has a beta of 0.92 and standard deviation of 14.23% 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.

Vanguard S&P 500 ETF (VOO - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. Vanguard S&P 500 ETF has $624.98 billion in assets, SPDR S&P 500 ETF has $631.47 billion. VOO 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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