The First Trust Dow Jones Global Select Dividend Index Fund (FGD) made its debut on 11/21/2007, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs category of the U.S. equity 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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
Managed by First Trust Advisors, FGD has amassed assets over $518.99 M, making it one of the larger ETFs in the Broad Developed World ETFs. Before fees and expenses, FGD seeks to match the performance of the Dow Jones Global Select Dividend Index.
This 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.
Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.03%.
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, Centurylink, Inc. (CTL) accounts for about 2.33% of the fund's total assets, followed by Galliford Try Plc (GFRD.LN) and Guess?, Inc. (GES).
The top 10 holdings account for about 15.31% of total assets under management.
Performance and Risk
FGD has lost about -0.59% so far this year, and as of 05/08/2018, was up about 7.83% in the last one year. In the past 52-week period, the fund has traded between $24.68 and $28.07.
The fund has a beta of 0.88 and standard deviation of 15.00% for the trailing three-year period, which makes FGD a low choice in this particular space. With about 101 holdings, it effectively diversifies company-specific risk.
First Trust Dow Jones Global Select Dividend Index Fund is a reasonable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares MSCI ACWI ETF (ACWI) tracks MSCI All Country World Index and the Vanguard Total World Stock ETF (VT) tracks FTSE Global All Cap Index. IShares MSCI ACWI ETF has $8.45 B in assets, Vanguard Total World Stock ETF has $11.72 B. ACWI has an expense ratio of 0.32% and VT charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World 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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ISHRS-MSCI ACWI (ACWI): ETF Research Reports
FT-DJ GL SEL DV (FGD): ETF Research Reports
Guess?, Inc. (GES) : Free Stock Analysis Report
CenturyLink, Inc. (CTL) : Free Stock Analysis Report
VANGD-TOT W STK (VT): ETF Research Reports
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