Launched on 08/27/2007, the First Trust STOXX European Select Dividend ETF (FDD Quick QuoteFDD - 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?

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

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.

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 managed by First Trust Advisors, and has been able to amass over $675.88 million, which makes it one of the average sized ETFs in the European Equity ETFs. This particular fund seeks to match the performance of the STOXX Europe Select Dividend 30 Index before fees and expenses.

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.

Annual operating expenses for FDD are 0.59%, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 5.09%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

When you look at individual holdings, Aker Bp Asa (AKRBP.NO) accounts for about 5.39% of the fund's total assets, followed by Abn Amro Group N.v. (ABN.NA) and Legal & General Group Plc (LGEN.LN).

Its top 10 holdings account for approximately 42.05% of FDD's total assets under management.

Performance and Risk

Year-to-date, the First Trust STOXX European Select Dividend ETF has added roughly 48% so far, and it's up approximately 38.29% over the last 12 months (as of 10/03/2025). FDD has traded between $11.07 $16.67 in this past 52-week period.

FDD has a beta of 0.84 and standard deviation of 17.22% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 34 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) tracks MSCI EMU Index and the Vanguard FTSE Europe ETF (VGK) tracks FTSE Developed Europe All Cap Index. iShares MSCI Eurozone ETF has $8.09 billion in assets, Vanguard FTSE Europe ETF has $27.69 billion. EZU has an expense ratio of 0.51% and VGK changes 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.