Is the First Trust Dow Jones Select MicroCap ETF (FDM) Worth Considering for Your Investment Portfolio?

Overview of First Trust Dow Jones Select MicroCap ETF (FDM)

• Launch and Management: The First Trust Dow Jones Select MicroCap ETF (FDM) was launched on September 27, 2005, and is managed by First Trust Advisors.
• Assets Under Management: The ETF has accumulated over $200.34 million in assets, positioning it as an average-sized fund within the Small Cap Blend segment of the US equity market.

Investment Characteristics

• Market Capitalization Focus: FDM targets small cap companies with market capitalizations below $2 billion, which are generally considered high-potential but come with increased risk compared to larger companies.
• Blend Strategy: The ETF holds a mix of growth and value stocks, reflecting characteristics of both investment styles.

Cost and Performance Metrics

• Expense Ratio: The annual operating expenses for FDM are 0.6%, aligning it with most of its peers in the ETF space.
• Dividend Yield: It offers a 12-month trailing dividend yield of 1.32%.
• Performance: As of August 29, 2025, FDM has gained approximately 11.63% year-to-date and 20.19% over the past year, with a trading range between $55.48 and $75.59 in the last 52 weeks.

Portfolio Composition

• Sector Allocation: The ETF has a significant allocation to the Financials sector at 28.3%, followed by Industrials and Energy.
• Top Holdings: Centrus Energy Corp. (LEU) constitutes about 5.72% of total assets, with Turning Point Brands, Inc. (TPB) and Willdan Group, Inc. (WLDN) also among the top holdings. The top 10 holdings represent approximately 23.57% of total assets.

Risk and Ranking

• Risk Profile: FDM has a beta of 1.03 and a standard deviation of 21.81% over the trailing three-year period, categorizing it as a medium-risk investment.
• Zacks ETF Rank: The ETF holds a Zacks ETF Rank of 3 (Hold), indicating a moderate outlook based on expected returns, expense ratios, and momentum.

Comparison with Other ETFs

• Similar ETFs: The iShares Russell 2000 ETF (IWM) and iShares Core S&P Small-Cap ETF (IJR) are comparable options, with IWM managing $67.45 billion and IJR $85.42 billion. IWM has an expense ratio of 0.19%, while IJR charges 0.06%.

Conclusion

• Investment Appeal: FDM is a viable option for investors seeking exposure to the Small Cap Blend market, offering low costs, transparency, and diversification. It is particularly appealing for long-term investors and is popular among both institutional and retail investors.