The First Trust Dow Jones Global Select Dividend ETF (FGD) made its debut on 11/21/2007, and is a smart beta exchange traded fund that provides broad exposure to the Foreign Large Value ETF category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $572.75 million, making it one of the average sized ETFs in the Foreign Large Value ETF. FGD, before fees and expenses, seeks to match the performance of the Dow Jones Global Select Dividend Index.
The Dow Jones Global Select Dividend Index is an indicated annual dividend yield weighted index of 100 stocks selected from the developed-market portion of the Dow Jones World Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.56%.
It's 12-month trailing dividend yield comes in at 5.97%.
Sector Exposure and Top Holdings
ETFs offer 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.
Taking into account individual holdings, Hapag-Lloyd Ag (HLAG.GY) accounts for about 2.93% of the fund's total assets, followed by Caixabank, S.a. (CABK.SM) and Bankinter, S.a. (BKT.SM).
FGD's top 10 holdings account for about 18.33% of its total assets under management.
Performance and Risk
The ETF has added about 5.38% and was up about 10.52% so far this year and in the past one year (as of 04/14/2025), respectively. FGD has traded between $21.66 and $24.74 during this last 52-week period.
The ETF has a beta of 0.72 and standard deviation of 16.03% for the trailing three-year period, making it a low risk choice in the space. With about 107 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Dow Jones Global Select Dividend ETF is a reasonable option for investors seeking to outperform the Foreign Large Value ETF segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional International Value ETF (DFIV) tracks ---------------------------------------- and the Schwab Fundamental International Equity ETF (FNDF) tracks Russell RAFI Developed ex US Large Co. Index (Net). Dimensional International Value ETF has $9.14 billion in assets, Schwab Fundamental International Equity ETF has $13.81 billion. DFIV has an expense ratio of 0.27% and FNDF charges 0.25%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Foreign Large Value ETF.
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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First Trust Dow Jones Global Select Dividend ETF (FGD): ETF Research Reports Schwab Fundamental International Equity ETF (FNDF): ETF Research Reports Dimensional International Value ETF (DFIV): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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