Launched on 08/27/2007, the First Trust STOXX European Select Dividend ETF (FDD) is a smart beta exchange traded fund offering broad exposure to the European Equity 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.
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.
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 $853.7 million, which makes it one of the larger ETFs in the European Equity ETFs. FDD 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 3.63%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Aker Bp Asa (AKRBP.NO) accounts for about 6.14% of the fund's total assets, followed by Orlen Sa (PKN.PW) and Rio Tinto Plc (RIO.LN).
Its top 10 holdings account for approximately 44.65% of FDD's total assets under management.
Performance and Risk
So far this year, FDD has gained about 8.81%, and it's up approximately 48.56% in the last one year (as of 04/14/2026). During this past 52-week period, the fund has traded between $13.53 and $18.98.
The fund has a beta of 0.68 and standard deviation of 15.85% for the trailing three-year period, which makes FDD a medium risk choice in this particular space. With about 33 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 $9.6 billion in assets, Vanguard European Stock Index Fund ETF Shares has $31.01 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
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First Trust STOXX European Select Dividend ETF (FDD): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).