A smart beta exchange traded fund, the First Trust STOXX European Select Dividend ETF (FDD Quick QuoteFDD - Free Report) debuted on 08/27/2007, and offers broad exposure to the European Equity ETFs category of the 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $910.8 million, this makes it one of the average sized ETFs in the European Equity ETFs. FDD is managed by First Trust Advisors. 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

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

It has a 12-month trailing dividend yield of 5.34%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

When you look at individual holdings, Legal & General Group Plc (LGEN.LN) accounts for about 5.93% of the fund's total assets, followed by Teleperformance Se (TEP.FP) and B&m European Value Retail Sa (BME.LN).

Its top 10 holdings account for approximately 45.29% of FDD's total assets under management.

Performance and Risk

The ETF return is roughly 18.28% and is up roughly 30.6% so far this year and in the past one year (as of 11/05/2026), respectively. FDD has traded between $15.81 and $20.71 during this last 52-week period.

The ETF has a beta of 0.69 and standard deviation of 15.91% for the trailing three-year period, making it 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 Core MSCI Europe ETF (IEUR) tracks MSCI Europe Investable Market Index and the Vanguard European Stock Index Fund ETF Shares (VGK) tracks FTSE Developed Europe All Cap Index. iShares Core MSCI Europe ETF has $9.79 billion in assets, Vanguard European Stock Index Fund ETF Shares has $30.76 billion. IEUR has an expense ratio of 0.10% 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.