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Is First Trust STOXX European Select Dividend ETF (FDD) a Strong ETF Right Now?
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Launched on 08/27/2007, the First Trust STOXX European Select Dividend ETF (FDD - Free Report) is a smart beta exchange traded fund offering broad exposure to the European Equity 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by First Trust Advisors, FDD has amassed assets over $208.33 million, making it one of the average sized ETFs in the European Equity ETFs. Before fees and expenses, FDD seeks to match the performance of the STOXX Europe Select Dividend 30 Index.
The STOXX Europe Select Dividend 30 Index consists of 30 high dividend-yielding securities selected from the STOXX Europe 600 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 0.59% for this ETF, which makes it one of the more expensive products in the space.
FDD's 12-month trailing dividend yield is 6.18%.
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, Natwest Group Plc (NWG.LN) accounts for about 6.43% of the fund's total assets, followed by Hsbc Holdings Plc (HSBA.LN) and Abn Amro Group N.v. (ABN.NA).
The top 10 holdings account for about 45.15% of total assets under management.
Performance and Risk
Year-to-date, the First Trust STOXX European Select Dividend ETF has added roughly 23.79% so far, and was up about 28.27% over the last 12 months (as of 03/20/2025). FDD has traded between $11.07 and $13.94 in this past 52-week period.
FDD has a beta of 0.96 and standard deviation of 18.58% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 33 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust STOXX European Select Dividend ETF is not a suitable option for investors seeking to outperform the European Equity ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares MSCI Eurozone ETF (EZU - Free Report) tracks MSCI EMU Index and the Vanguard FTSE Europe ETF (VGK - Free Report) tracks FTSE Developed Europe All Cap Index. IShares MSCI Eurozone ETF has $8.95 billion in assets, Vanguard FTSE Europe ETF has $20.29 billion. EZU has an expense ratio of 0.51% and VGK charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the European Equity 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 STOXX European Select Dividend ETF (FDD) a Strong ETF Right Now?
Launched on 08/27/2007, the First Trust STOXX European Select Dividend ETF (FDD - Free Report) is a smart beta exchange traded fund offering broad exposure to the European Equity 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by First Trust Advisors, FDD has amassed assets over $208.33 million, making it one of the average sized ETFs in the European Equity ETFs. Before fees and expenses, FDD seeks to match the performance of the STOXX Europe Select Dividend 30 Index.
The STOXX Europe Select Dividend 30 Index consists of 30 high dividend-yielding securities selected from the STOXX Europe 600 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 0.59% for this ETF, which makes it one of the more expensive products in the space.
FDD's 12-month trailing dividend yield is 6.18%.
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, Natwest Group Plc (NWG.LN) accounts for about 6.43% of the fund's total assets, followed by Hsbc Holdings Plc (HSBA.LN) and Abn Amro Group N.v. (ABN.NA).
The top 10 holdings account for about 45.15% of total assets under management.
Performance and Risk
Year-to-date, the First Trust STOXX European Select Dividend ETF has added roughly 23.79% so far, and was up about 28.27% over the last 12 months (as of 03/20/2025). FDD has traded between $11.07 and $13.94 in this past 52-week period.
FDD has a beta of 0.96 and standard deviation of 18.58% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 33 holdings, it has more concentrated exposure than peers.
Alternatives
First Trust STOXX European Select Dividend ETF is not a suitable option for investors seeking to outperform the European Equity ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares MSCI Eurozone ETF (EZU - Free Report) tracks MSCI EMU Index and the Vanguard FTSE Europe ETF (VGK - Free Report) tracks FTSE Developed Europe All Cap Index. IShares MSCI Eurozone ETF has $8.95 billion in assets, Vanguard FTSE Europe ETF has $20.29 billion. EZU has an expense ratio of 0.51% and VGK charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the European Equity 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.