Making its debut on 08/27/2007, smart beta exchange traded fund First Trust STOXX European Select Dividend ETF (FDD) provides investors broad exposure to the European Equity ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by First Trust Advisors, FDD has amassed assets over $925.82 million, making it one of the larger ETFs in the European Equity ETFs. This particular fund, before fees and expenses, seeks to match the performance of the STOXX Europe Select Dividend 30 Index.
The STOXX Europe Select Dividend 30 Index consists of 30 high dividend-yielding securities selected from the STOXX Europe 600 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 has a 12-month trailing dividend yield of 4.92%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Taking into account individual holdings, Legal & General Group Plc (LGEN.LN) accounts for about 6.15% of the fund's total assets, followed by Taylor Wimpey Plc (TW/.LN) and Aegon Ltd. (AGN.NA).
Its top 10 holdings account for approximately 43.17% of FDD's total assets under management.
Performance and Risk
The ETF has gained about 20.51% and is up about 30.92% so far this year and in the past one year (as of 08/24/2026), respectively. FDD has traded between $15.77 and $20.60 during this last 52-week period.
The fund has a beta of 0.68 and standard deviation of 15.89% for the trailing three-year period, which makes FDD a medium risk choice in this particular 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 MSCI Eurozone ETF (EZU) tracks MSCI EMU Index and the Vanguard European Stock Index Fund ETF Shares (VGK) tracks FTSE Developed Europe All Cap Index. iShares MSCI Eurozone ETF has $9.96 billion in assets, Vanguard European Stock Index Fund ETF Shares has $31.17 billion. EZU has an expense ratio of 0.50% 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.
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First Trust STOXX European Select Dividend ETF (FDD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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