First Trust Dow Jones Select MicroCap Index Fund

FDM

Market cap $249M

If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the First Trust Dow Jones Select MicroCap ETF (FDM), a passively managed exchange traded fund launched on September 27, 2005.

The First Trust Dow Jones Select MicroCap Index Fund ETF offers diversified micro-cap exposure with 150 stocks, low company risk, and a 0.60% expense ratio. FDM features strong value characteristics versus the small-cap benchmark IWM but carries significant sector risk in financials. FDM's historical returns closely match IWM and outperform key competitor IWC long-term, yet have lagged IWC over the past year.

If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the First Trust Dow Jones Select MicroCap ETF (FDM), a passively managed exchange traded fund launched on September 27, 2005.

Launched on September 27, 2005, the First Trust Dow Jones Select MicroCap ETF (FDM) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Blend segment of the US equity market.

Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the First Trust Dow Jones Select MicroCap ETF (FDM) is a passively managed exchange traded fund launched on September 27, 2005.

Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the First Trust Dow Jones Select MicroCap ETF (FDM) is a passively managed exchange traded fund launched on September 27, 2005.

FDM might lure investors with its 5.8% earnings yield, something that is quite complicated to find in today's high-priced market fluctuating around record highs. However, the reality of micro-cap investing is that large value exposure, sadly, translates into high-risk and low reward. This is the main consequence of the universe having inadequate quality. While FDM does address the quality issue in a diligent manner, which secured outperformance over its peer IWC since its inception, it has significantly underperformed IVV and IJR.

The recent sell-off in major US stock indices has been largely driven by broader macroeconomic factors. Value stocks may not be able to provide a hedge against undiversifiable risks.

Strong returns in U.S. stocks, particularly over the past two plus years, have led investors to question the relative lack of companies going public via the IPO process — as well as the potential implications for the IPO market in the long term. According to active equity managers, a combination of increased public market regulation, a reduced pipeline of potential offerings following the prior boom, the rising role of large private asset managers in capital raising, and near-term uncertainty surrounding government policy are all contributing factors. At Russell Investments, we think investors benefit from taking a long-term view.

Small-cap ETFs have been outperforming on optimism over Donald Trump's policies, which will likely result in faster economic growth.