Is First Trust BICK Index Fund (BICK) a Hot ETF Right Now?

A smart beta exchange traded fund, the First Trust BICK Index Fund (BICK) debuted on 04/12/2010, and offers broad exposure to the Broad Emerging Market ETFs category of the U.S. equity market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

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

The fund is sponsored by First Trust Advisors. It has amassed assets over $238.67 M, making it one of the average sized ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the ISE BICK Index before fees and expenses.

The ISE BICK Index is designed to provide a benchmark for investors interested in tracking the largest and most liquid public companies that are domiciled in Brazil, India, Mainland China and South Korea.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.64% for BICK, making it on par with most peer products in the space.

BICK's 12-month trailing dividend yield is 1.18%.

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.

When you look at individual holdings, Wns (holdings) Limited (adr) (WNS) accounts for about 2.17% of the fund's total assets, followed by Makemytrip Limited (MMYT) and Yatra Online, Inc. (YTRA).

Its top 10 holdings account for approximately 19.55% of BICK's total assets under management.

Performance and Risk

The fund's year-to-date return has lost about -4.57%, and is up roughly 11.14% in the last one year (as of 06/08/2018). BICK has traded between $25.42 and $33.60 in the past 52-week period.

The fund has a beta of 1.27 and standard deviation of 21.40% for the trailing three-year period, which makes BICK a medium choice in this particular space. With about 89 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust BICK Index Fund is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China An Inclusion Index. IShares Core MSCI Emerging Markets ETF has $50 B in assets, Vanguard FTSE Emerging Markets ETF has $66.49 B. IEMG has an expense ratio of 0.14% and VWO charges 0.14%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market 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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FT-BICK IF (BICK): ETF Research Reports
 
WNS (Holdings) Limited (WNS) : Free Stock Analysis Report
 
MakeMyTrip Limited (MMYT) : Free Stock Analysis Report
 
VANGD-FTSE EM (VWO): ETF Research Reports
 
Yatra Online, Inc. (YTRA) : Free Stock Analysis Report
 
ISHARS-CR MS EM (IEMG): ETF Research Reports
 
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