Designed to provide broad exposure to the Foreign Large Value ETF category of the market, the First Trust Dow Jones Global Select Dividend ETF (FGD Quick QuoteFGD - 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.

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.

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.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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

The fund is sponsored by First Trust Advisors. It has amassed assets over $573.11 million, making it one of the average sized ETFs in the Foreign Large Value ETF. Before fees and expenses, FGD 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

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 FGD are 0.56%, which makes it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 5.61%.

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.

Taking into account individual holdings, Hapag-Lloyd Ag (HLAG.GY) accounts for about 3.15% of the fund's total assets, followed by Altria Group, Inc. (MO Quick QuoteMO - Free Report) and British American Tobacco Plc (BATS.LN).

FGD's top 10 holdings account for about 17.4% of its total assets under management.

Performance and Risk

The ETF has added roughly 4.47% so far this year and was up about 12.77% in the last one year (as of 02/12/2025). In the past 52-week period, it has traded between $21.57 and $24.64.

FGD has a beta of 0.92 and standard deviation of 15.68% for the trailing three-year period, which makes the fund a low risk choice in the space. With about 105 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 Foreign Large Value ETF segment of the market. However, there are other ETFs in the space which investors could consider.