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Should First Trust Dow Jones Select MicroCap ETF (FDM) Be on Your Investing Radar?
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Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the First Trust Dow Jones Select MicroCap ETF (FDM - Free Report) is a passively managed exchange traded fund launched on September 27, 2005.
The fund is sponsored by First Trust Advisors. It has amassed assets over $200.34 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.6%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.32%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector -- about 28.3% of the portfolio. Industrials and Energy round out the top three.
Looking at individual holdings, Centrus Energy Corp. (class A) (LEU) accounts for about 5.72% of total assets, followed by Turning Point Brands, Inc. (TPB) and Willdan Group, Inc. (WLDN).
The top 10 holdings account for about 23.57% of total assets under management.
Performance and Risk
FDM seeks to match the performance of the Dow Jones Select Microcap Index before fees and expenses. The Dow Jones Select Microcap Index represents microcap stocks that are comparatively liquid and have strong fundamentals relative to the microcap segment as a whole.
The ETF has added about 11.63% so far this year and is up roughly 20.19% in the last one year (as of 08/29/2025). In the past 52-week period, it has traded between $55.48 and $75.59.
The ETF has a beta of 1.03 and standard deviation of 21.81% for the trailing three-year period, making it a medium risk choice in the space. With about 137 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Dow Jones Select MicroCap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FDM is a sufficient option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $67.45 billion in assets, iShares Core S&P Small-Cap ETF has $85.42 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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Should First Trust Dow Jones Select MicroCap ETF (FDM) Be on Your Investing Radar?
Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the First Trust Dow Jones Select MicroCap ETF (FDM - Free Report) is a passively managed exchange traded fund launched on September 27, 2005.
The fund is sponsored by First Trust Advisors. It has amassed assets over $200.34 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.6%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.32%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector -- about 28.3% of the portfolio. Industrials and Energy round out the top three.
Looking at individual holdings, Centrus Energy Corp. (class A) (LEU) accounts for about 5.72% of total assets, followed by Turning Point Brands, Inc. (TPB) and Willdan Group, Inc. (WLDN).
The top 10 holdings account for about 23.57% of total assets under management.
Performance and Risk
FDM seeks to match the performance of the Dow Jones Select Microcap Index before fees and expenses. The Dow Jones Select Microcap Index represents microcap stocks that are comparatively liquid and have strong fundamentals relative to the microcap segment as a whole.
The ETF has added about 11.63% so far this year and is up roughly 20.19% in the last one year (as of 08/29/2025). In the past 52-week period, it has traded between $55.48 and $75.59.
The ETF has a beta of 1.03 and standard deviation of 21.81% for the trailing three-year period, making it a medium risk choice in the space. With about 137 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Dow Jones Select MicroCap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FDM is a sufficient option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $67.45 billion in assets, iShares Core S&P Small-Cap ETF has $85.42 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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.