Launched on 04/12/2010, the First Trust BICK Index Fund (BICK - Free Report) is a smart beta exchange traded fund offering broad exposure to the Broad Emerging Market ETFs category of the U.S. equity market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
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. BICK has been able to amass assets over $246.51 M, making it one of the average sized ETFs in the Broad Emerging Market ETFs. BICK seeks to match the performance of the ISE BICK Index before fees and expenses.
The ISE BICK Index is designed to provide a benchmark for investors interested in tracking the largest and most liquid public companies that are domiciled in Brazil, India, Mainland China and South Korea.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for BICK are 0.64%, which makes it on par with most peer products in the space.
BICK's 12-month trailing dividend yield is 1.14%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Makemytrip Limited (MMYT - Free Report) accounts for about 2.06% of the fund's total assets, followed by Yatra Online, Inc. (YTRA - Free Report) and Wns (holdings) Limited (adr) (WNS - Free Report) .
The top 10 holdings account for about 18.67% of total assets under management.
Performance and Risk
BICK has lost about -1.44% so far this year, and as of 05/03/2018, is up about 21.62% in the last one year. In the past 52-week period, the fund has traded between $24.47 and $33.60.
The ETF has a beta of 1.27 and standard deviation of 21.32% for the trailing three-year period, making it a medium choice in the space. With about 89 holdings, it effectively diversifies company-specific risk.
First Trust BICK Index Fund is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China An Inclusion Index. IShares Core MSCI Emerging Markets ETF has $49.84 B in assets, Vanguard FTSE Emerging Markets ETF has $66.47 B. IEMG has an expense ratio of 0.14% and VWO charges 0.14%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs.
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.