Making its debut on 04/12/2010, smart beta exchange traded fund First Trust BICK Index Fund (BICK) provides investors broad exposure to the Broad Emerging Market ETFs 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 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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 managed by First Trust Advisors, and has been able to amass over $222.68 M, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. Before fees and expenses, this particular fund seeks to match the performance of the ISE BICK Index.
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.64%.
The fund has a 12-month trailing dividend yield of 1.34%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Dr. Reddy's Laboratories Limited (adr) (RDY) accounts for about 2.03% of total assets, followed by Reliance Industries Limited (gdr) (RIGD.LI) and Wipro Ltd. (adr) (WIT).
BICK's top 10 holdings account for about 18.26% of its total assets under management.
Performance and Risk
The ETF has lost about -6.71% so far this year and is up roughly 2.11% in the last one year (as of 07/25/2018). In the past 52-week period, it has traded between $26.58 and $33.60.
The fund has a beta of 1.24 and standard deviation of 21.55% for the trailing three-year period, which makes BICK a medium choice in this particular space. With about 90 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) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China An Inclusion Index. IShares Core MSCI Emerging Markets ETF has $47.89 B in assets, Vanguard FTSE Emerging Markets ETF has $62.18 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.
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FT-BICK IF (BICK): ETF Research Reports
Wipro Limited (WIT) : Free Stock Analysis Report
VANGD-FTSE EM (VWO): ETF Research Reports
Dr. Reddy's Laboratories Ltd (RDY) : Free Stock Analysis Report
ISHARS-CR MS EM (IEMG): ETF Research Reports
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