Equity: U.K. - Total Market

HEWU Top Performer Intra-day
Price $24.48
Today’s Change +0.04%(0.16)
3:07pm 05/26/2017
FKU Bottom Performer Intra-day
Price $37.30
Today’s Change -0.46%(-1.22)
2:56pm 05/26/2017
  • Overview
  • Efficiency
  • Tradability
  • Fit

ETF.com Insight

The five ETFs offering exposure to the UK couldn't be more different. EWU offers a broad, plain-vanilla portfolio of over 100 large- and midcap UK stocks weighted by market cap. It isThe three ETFs offering exposure to the UK couldnt be more different. relatively concentrated in its top holdings, with large positions in mainstays like Royal Dutch Shell, HSBC and BP.
DXPS also includes the UK's biggest names but it reorders them based on dividend yield. Still, DXPS' big distinction is currency-hedging. The fund hedges against fluctuations in the pound sterling which gives investors exclusive access to equity returns. DXPS isn't the only currency-hedged game in town: DBUK also hedges pound sterling exposure. Unlike DXPS, DBUK sticks to a market cap-weighting scheme to provide plain vanilla exposure without the pound.
In contrast, FKU attempts to beat the market with its quant model. FKU holds the 75 stocks that it determines to have the best chance of outperforming, and weights them equally in tiers based on their attractiveness. FKU's portfolio doesn't look much like the broad UK equity market, but it does provide an alternative portfolio for investors intrigued by its AlphaDex model.
Lastly, QGBR sticks three separate strategies into a single fund. QGBR tracks a "quality mix" index that is one part U.K. securities with low valuations, one part U.K. securities that are relatively uncorrelated to each other, and one part U.K. securities with stable earnings and low leverage.
Strategy and exposure aside, cost is another disparity between the three funds. QGBR's quality mix portfolio is the cheapest of the bunch at 30 bps. The currency-hedged ETFs come next as DBUK's 45 bp fee slightly undercuts DXPS' 48 bp fee. A half-notch higher is EWU whose 51 bp fee is slightly higher than others in the group. Once spreads are factored into the equation EWU is the clear favorite as its tighter spreads more than make up for its slightly higher expense ratio. Meanwhile, FKU charges 80 bps for its quant-driven strategy and struggles with wide bid/ask spreads making it an all-around expensive fund to own and trade.
Given its superior liquidity and broad coverage, EWU is the Analyst Pick for the UK Total Market segment. (Insight updated 05/26/17)

All Funds (6)

EWU $2.71 B 2712030310 Most liquid, neutral choice

A 98
E
91
91
T
90
90
F
98
98

QGBR $13.32 M 13316250 High closure risk

C 91
E
88
88
T
52
52
F
91
91

DBUK $5.48 M 5479521.918 Doesn't trade

C 39
E
77
77
T
54
54
F
39
39

DXPS $18.49 M 18487125 Currency hedged, export focused

C 35
E
81
81
T
50
50
F
35
35

FKU $28.29 M 28290772.94186 Terrible tracking

D 80
E
67
67
T
58
58
F
80
80

HEWU $26.88 M 26884330 Ignore bad tracking

N/A 0
E
0
-1
T
0
-1
F
0
-1

ETF.com Grade as 05/18/17

Equity: U.K. - Total Market

1 Year Total Return NAV
Performance  [as of 05/25/17] 1 Month 3 Month YTD 1 Year 3 Years 5 Years 10 Years
Benchmark: MSCI United Kingdom Investable Markets4.66%9.26%13.13%9.16%-1.39%7.63%--
A 98.041596EWU2712030310EWUiShares MSCI United Kingdom ETF4.80%8.63%13.20%9.23%-2.61%6.27%0.04%
C 91.214738QGBR13316250QGBRSPDR MSCI United Kingdom StrategicFactors ETF5.31%10.85%14.97%9.47%------
C 39.341982DBUK5479521.918DBUKDeutsche X-trackers MSCI United Kingdom Hedged Equity ETF6.43%4.88%8.04%24.18%5.88%----
C 34.82178DXPS18487125DXPSWisdomTree United Kingdom Hedged Equity Fund4.18%5.00%8.24%26.80%7.07%----
D 79.978779FKU28290772.94186FKUFirst Trust United Kingdom AlphaDEX Fund3.42%11.80%15.87%-2.15%-1.83%8.89%--
N/A 0HEWU26884330HEWUiShares Currency Hedged MSCI United Kingdom ETF3.82%4.62%8.00%23.99%------
All returns over 1 year are annualized. All returns are total returns unless otherwise stated.

ETF.com Efficiency Insight

None of the Total Market UK funds is without its warts in Efficiency.
EWU, our Analyst Pick, charges 51 bps. That might have been a competitive expense ratio when the fund launchedEWU is a very efficient fund almost 20 years ago, but today it shares the space with several funds that charge lower fees despite following specialized strategies. Cost aside, EWU is a very efficient fund: It has never made a capital gains payout, meets all our transparency requirements, and has tracked its underlying index closely. It claims over 95% of the assets in the segment.
FKU is in trouble: In addition to charging the highest fee in the segment, its tracking results add further to costs. At one point in the past 2 years, it lagged its own index by more than 4%, a truly awful showing.
The other three funds in the segment all charge lower fees, but have struggled to attract assets. QGBR is the cheapest and most recent launch, but at this point it holds little more than its starting seed capital. All three funds face elevated closure risk. (Insight updated 05/26/17)

All Funds (6)

91
90.710478
88
87.660602
81
80.76171
77
77.379608
67
67.013078
N/A
0

ETF.com Grade as 05/18/17

Equity: U.K. - Total Market

Tracking Difference (12 Month)

Ticker Expense Ratio Median Max. Upside Max. Downside Max LT/ST Cap Gains Rate Rule Legal Structure Fund Closure Risk Efficiency
DBUK Deutsche X-trackers MSCI United Kingdom Hedged Equity ETF 0.45% -0.88% -0.47% -1.16% 20.00% / 39.60% High 77.379608
DXPS WisdomTree United Kingdom Hedged Equity Fund 0.48% -1.09% -0.49% -1.59% 20.00% / 39.60% Medium 80.76171
EWU iShares MSCI United Kingdom ETF 0.48% -0.49% -0.36% -0.58% 20.00% / 39.60% Low 90.710478
FKU First Trust United Kingdom AlphaDEX Fund 0.80% -1.16% 0.23% -3.12% 20.00% / 39.60% Low 67.013078
HEWU iShares Currency Hedged MSCI United Kingdom ETF 0.49% -0.58% 2.40% -2.68% 20.00% / 39.60% Low 0
QGBR SPDR MSCI United Kingdom StrategicFactors ETF 0.30% -0.36% -0.27% -0.46% 20.00% / 39.60% Medium 87.660602

ETF.com Tradability Insight

EWU's excellent on-screen liquidity stands in stark contrast to the other funds in the segment. EWU trades over $30M worth of shares most days while most of the other funds barelyEWUs excellent on-screen liquidity stands in stark contrast trade at all. For example, most days go by without a single trade in DBUK or QGBR. Only FKU sees significant volume, and its quoted spreads have tended to be among the segments widest.
Investors looking to trade in bulk, however, have a variety of options as all of the funds charge reasonable creation fees and since they all hold large UK companies, underlying liquidity and market impact are not an issue. (Insight updated 05/26/17)

All Funds (6)

90
89.864542
58
58.288516
54
54.085477
52
52.415619
50
50.484997
N/A
0

ETF.com Grade as 05/18/17

Equity: U.K. - Total Market

Ticker Median Daily Volume ($) Average Spread Creation Unit/Day Market Hours Overlap Underlying Volume/Unit % Creation Cost Per Unit (%) Impediment to Creations Score - Tradability
DBUK Deutsche X-trackers MSCI United Kingdom Hedged Equity ETF $3.59 K 0.28% 0.00 31.00% 0.02% 0.05% None 54.085477
DXPS WisdomTree United Kingdom Hedged Equity Fund $51.94 K 0.44% 0.04 31.00% 0.04% 0.07% None 50.484997
EWU iShares MSCI United Kingdom ETF $68.8 M 0.03% 20.34 31.00% 0.07% 0.10% None 89.864542
FKU First Trust United Kingdom AlphaDEX Fund $96.66 K 0.17% 0.05 31.00% 0.20% 0.03% None 58.288516
HEWU iShares Currency Hedged MSCI United Kingdom ETF $516.73 K 0.10% 0.44 100.00% 2.10% 0.01% None 0
QGBR SPDR MSCI United Kingdom StrategicFactors ETF $64.99 K 0.34% 0.02 31.00% 0.07% 0.07% None 52.415619
Spread History
Premium/Discount History

ETF.com/ Block Liquidity

EWU
5
4
3
2
1
DBUK
5
4
3
2
1
DXPS
5
4
3
2
1
FKU
5
4
3
2
1
QGBR
5
4
3
2
1
HEWU
5
4
3
2
1

This measurement shows how easy it is to trade 25,000 shares of each ETF.

ETF.com Fit Insight

For five portfolios that try to capture the same market, they look radically different.
EWU takes the broad, plain vanilla passive investing approach. It holds the biggest stocks in theDXPS goes a step further to hedge against fluctuations in the pound sterling UK and weights them by their market caps to capture the neutral UK equity market. In proportion to the UK equity market, EWU allocates heavily to energy and financials companies.
In contrast, FKU takes a semi-active approach. It holds 75 securities, chosen every six months based on perceived outperformance potential, and weights them equally within five tiers.
Meanwhile, DXPS and DBUK opt for the currency-hedged route. Aside from its currency-hedging DBUK sticks to a mostly plain-vanilla approach whereas DXPS selects and weights its portfolio by dividend yield.
EWU excludes small-caps so it tilts larger than both our benchmark and FKU, and has a large concentration of assets in its biggest names. FKU is at the opposite end of the size spectrum: It tilts smaller, since its weighting scheme reduces the influence of big companies like Royal Dutch Shell. It also currently excludes big names like HSBC and GlaxoSmithKline. DXPS caps its largest holdings which results in a slightly smaller profile as well.
The funds have different sector allocations as well. EWU and DBUK for the most part, mirror our segment benchmark with the heaviest allocations to financials, energy, and consumer non-cyclicals. In comparison, FKU makes major sector bets away from our benchmark. Currently it invests over 40% of its portfolio in financials, which make up less than 25% of EWU and DBUK. That said, FKU's tilts could change every six months, so long-term investors should buy the strategy rather than the current tilts. DXPS and QGBR are the only two funds to really curtail the dominance that financials have on the UK economy. DXPS redistributes the excess weight to dividend-heavy consumer non-cyclicals and basic materials companies, while QGBR focuses on industrials.
Overall, investors seeking exposure to the U.K. equity market should first decide if they want exposure to the pound sterling. If not, DXPS (dividend emphasis) and DBUK (vanilla) are the prime contenders. Investors seeking exposure to the pound sterling and the U.K. equity market must then decide if they want plain vanilla exposure or a fund that attempts to beat the market. For plain vanilla exposure, EWU is the right choice. Investors who, instead, want to take tilts away from the market might consider FKU or QGBR. (Insight updated 05/26/17)

All Funds (6)

98
98.041596
91
91.214738
80
79.978779
39
39.341982
35
34.82178
N/A
0

ETF.com Grade as 05/18/17

Equity: U.K. - Total Market