This is a passive ETF that invests equal amounts in the large-cap blue-chip stocks that make up the Dow Jones Industrial Average. Rather than weighting by market capitalization, it spreads its assets evenly across its constituent stocks using an equal-weight method.

It suits investors who want to invest evenly in Dow blue chips without concentration in any single stock.

It is an ETF managed by First Trust using a passive (index-tracking) approach.

The fund invests in the constituents of the Dow Jones Industrial Average by assigning each an equal weight instead of a market-cap weight, and it rebalances the weights periodically. Unlike the market-cap-weighted Dow, it reduces concentration in the largest stocks and provides even exposure across its holdings, though its structure is limited to a small number of constituents.

• Equal weighting of Dow constituents
• Reduced concentration in individual stocks

Assets under management (AUM) stand at $323.2M, and the expense ratio is 0.50% per year.

The main points of comparison against the market-cap-weighted Dow and broad-market ETFs are equal weighting and holdings concentration.

The Dow constituents follow the overall trend of US large-cap blue chips, and equal weighting reduces concentration in the largest stocks, so performance tends to diverge somewhat from market-cap weighting. In phases when a handful of mega-cap stocks lead the market, equal weighting may lag in relative terms.

Fund flows into the Dow equal-weight strategy vary with preferences for large-cap blue chips and demand for diversification, and money sometimes shifts into equal-weight products when concerns about concentration in a few stocks grow. It is also worth watching how performance changes depending on which stocks are leading the market.

Equal-weight diversification is its strength, while the limited number of holdings, lagging market leaders and market risk are considerations.

For exposure to 100 mega-cap stocks, direct alternatives include OEF, and for exposure to the entire US market, products such as ITOT are also worth comparing. Investors seeking another broad-market option can also consider products such as SCHB. The three products shown in the table, OEF, ITOT and SCHB, track mega-cap and broad-market indexes respectively and differ in number of holdings and weighting method, while this ETF is differentiated by its equal weighting of Dow constituents.

These are the points to review before investing in EDOW. Equal-weight diversification is appealing, but the limited number of holdings, lagging market leaders and market risk should be checked in advance. It is also advisable to compare it with market-cap-weighted and broad-market products.

Relative underperformance when a few mega-cap stocks lead the market and the limited number of holdings are the main variables for performance, and because the fund consists only of the Dow constituents, its diversification is narrower than that of broad indexes. In market downturns, even blue-chip stocks can suffer losses.

It is a suitable candidate for investors who want to invest evenly in Dow blue chips. For exposure to mega-cap stocks or the broad market, consider products such as OEF and ITOT, and if you want Dow equal-weight exposure, it is advisable to compare this product alongside them before choosing.