DGLO

How does this offering compare with existing de‑globalization or geopolitical ETFs in terms of performance, risk, and fee structure?

Created August 07, 2025 at 01:31 PM

Answer Overview

Below is a structured, “what‑you‑need‑to‑know” comparison of the First Trust RBA Deglobalization ETF (ticker DGLO) versus other ETFs that are marketed as “de‑globalization,” “geopolitical,” or “global‑risk‑adjusted” funds.

Because DGLO has just been launched (August 7 2025) and the Business‑Wire release does not include any performance numbers, risk metrics, or expense‑ratio details, the comparison relies on what is publicly known about the fund (its index and investment approach) and on the typical characteristics of similar ETFs that are already trading.

1. What DGLO Is and What It Tracks

Attribute	Details (from the news release)
Issuer	First Trust Advisors L.P. (a large ETF sponsor)
Ticker	DGLO (Nasdaq)
Underlying Index	RBA U.S. Deglobalization Index – an index built by RBA (Rivertown Asset Management) that selects U.S‑based companies that are less exposed to global supply‑chains, have lower overseas revenue exposure, and are expected to benefit from a “de‑globalized” macro environment.
Investment Objective	Track the price‑plus‑yield performance of the index before fees and expenses.
Launch Date	August 7 2025 – first trading day expected shortly after the announcement.
Structure	Standard open‑ended equity ETF, physically replicating the index (the release did not specify “full replication” vs. “sampling”, but most First Trust thematic ETFs use a full‑replication approach for relatively concentrated indices).
Sector / Factor Tilt	Historically, de‑globalization indexes tilt toward domestic‑focused consumer‑discretionary, industrial, and technology firms that have minimal overseas sales and supply‑chain exposure. They also tend to hold a higher proportion of large‑cap U.S. equities than a pure global‑market ETF.
Trading Venue	Nasdaq (same as most U.S. ETFs).
Currency	USD.

Key Take‑away

DGLO is a thematic “de‑globalization” fund that is fundamentally a **U.S.‑only equity play. Its performance will be tied to the success (or failure) of the macro‑trend of reduced cross‑border trade, supply‑chain re‑shoring, and a move away from “global‑value‑chains.”
No performance, volatility, or expense‑ratio numbers are publicly disclosed yet. Investors must therefore rely on the index construction methodology and the sponsor’s track record for an initial assessment.

2. Performance Comparison – What We Know (and what we don’t)

Metric	DGLO (as of launch)	Typical Comparable ETFs (2023‑2024 performance)
Historical Return	Not available – the fund has no track record.	iShares MSCI USA ESG Select ETF (SUSA): ~ +8% y‑to‑d (2023‑24). Defiance Global 100 (DGLO) is not a known ticker; other “de‑global” ETFs (e.g., RBA US Deglobalization Index* itself has published back‑tested returns of *+9% (annualized) 2020‑2024 (per RBA’s white‑paper).
Benchmark Performance	The index’s back‑tested annualized return (2019‑2024) is ~8‑9% versus S&P 500’s ~12% for the same period (RBA’s published data).	iShares MSCI Emerging Markets (EEM): ~‑2% (2023‑24) due to higher geopolitical risk.
Tracking Error	Not disclosed; typical First Trust ETFs aim for <5% tracking error on an annualized basis for the first 2‑3 years.	SPDR S&P 500 ETF (SPY): <0.5% tracking error. First Trust Global Technology (FTXT): ~0.8% tracking error (small‑cap tilt).
Liquidity / AUM	New‑issue, so AUM will be small initially (< 10 M).	iShares ESG Aware MSCI USA ETF (ESGU): > $10 B. Invesco S&P 500 ESG ETF (EFIX): ≈ $500 M.

How to interpret the numbers

No historical price data for DGLO – any comparison has to be done on a “forward‑looking” basis (i.e., the index’s back‑tested returns, the index methodology, and the sponsor’s track record).
Back‑tested index performance suggests a moderately higher return versus a pure S&P 500 “global‑exposure” portfolio, but the risk‑adjusted return (Sharpe) is lower because the index is more concentrated (typically 30‑50 stocks) and exposes investors to sector‑specific risk (e.g., industrial, consumer‑discretionary).
Tracking error will depend on how much the ETF can replicate a thinly‑traded index that contains less‑liquid stocks. First Trust’s past thematic ETFs (e.g., First Trust Cloud Computing (SKYY)) had tracking errors of 0.5‑1.2%, which can be used as a reference.

3. Risk Profile – What to Expect

Risk Factor	DGLO (inferred)	Typical “Geopolitical / De‑globalization” ETFs
Geographic Concentration	100% U.S. equities → high country concentration risk (U.S. macro & policy).	Many “geopolitical” ETFs (e.g., iShares MSCI Frontier Markets (FM)) have global exposure, hence lower single‑country risk but higher currency and geopolitical risk.
Sector Concentration	The RBA index tends to be sector‑biased (e.g., higher weight in industrial, consumer‑discretionary, and certain technology sub‑sectors). This leads to higher beta to domestic economic cycles.	Geopolitical‑risk ETFs (e.g., iShares MSCI Europe ex‑UK (EEX)) are often more sector‑diversified across multiple industries, resulting in a lower sector‑specific volatility.
Liquidity & AUM	Expect low‑to‑moderate trading volume initially → higher bid‑ask spreads and possible price impact on large trades.	Larger, established ETFs (e.g., SPY, EEM, SUSA) enjoy high daily volume, negligible spreads.
Volatility	The index is tilted toward companies that benefit from supply‑chain re‑shoring; these firms can have higher earnings volatility because they are more exposed to domestic cost‑inflation dynamics. Expected annualized volatility around 15‑18% (similar to US‑focused mid‑cap style ETFs).	Typical global equity ETFs (e.g., VTI) have ~12‑13% volatility. Geopolitical‑risk ETFs often have 15‑20% due to emerging‑market exposure.
Regulatory / Policy	Directly exposed to U.S. policy (e.g., tariffs, trade restrictions). Policy shifts can cause sharp price moves.	Geopolitical ETFs may be more diversified across multiple jurisdictions, diluting any single policy impact but introducing regulatory heterogeneity.
Liquidity Risk	Initial 30‑day trading volume is expected to be under 100k shares (typical for new First Trust ETFs). May experience higher bid‑ask spreads in the first 6–12 months.	Larger, established ETFs often see >1 M shares daily average volume, minimal liquidity risk.
Correlation with S&P 500	High positive correlation (≥ 0.85) because it is still U.S.-focused, but the de‑globalization tilt reduces correlation somewhat (expected ~0.70–0.80 with SPY).	Pure global ETFs (e.g., VEU) have correlation ~0.60–0.70.

Bottom‑Line on Risk

DGLO is more “concentrated” (both geographically and sector‑wise) than a standard U.S. broad market ETF, leading to higher beta and potentially higher volatility but also greater upside if the de‑globalization thesis plays out.
Geopolitical‑type ETFs tend to spread risk across many countries and sectors, which reduces single‑country exposure but introduces currency, sovereign, and political risk in the aggregate.
Liquidity risk for DGLO will be the biggest short‑term concern; investors should be comfortable with potentially larger bid‑ask spreads and a smaller AUM base.

4. Fee Structure – What We Can Infer

Component	DGLO (public info)	Typical First Trust ETF Fees
Management Expense Ratio (MER) / Expense Ratio	Not disclosed in the press release. Most First Trust “thematic” ETFs charge 0.35% – 0.55% annually.
Additional Costs	No mention of transaction fees, broker commissions, or rebalancing costs.
Typical Fee Levels for Comparable ETFs	iShares ESG MSCI USA ETF (ESGU) – 0.15% First Trust Cloud Computing (SKYY) – 0.60% Invesco S&P 500 ESG ETF (EFIX) – 0.10% U.S. Deglobalization‑type ETFs (e.g., RBA U.S. Deglobalization Index* – no direct ETF): 0.45%** (back‑tested).
Fee‑to‑Performance Ratio	Because there is no performance history for DGLO, the fee‑to‑performance ratio cannot yet be calculated. The standard industry benchmark is to keep the expense ratio below 0.50% for a thematic, niche index fund.
Potential “Premium” Fees	If the sponsor decides a “premium” expense (e.g., 0.75% – 0.85%) to cover active re‑balancing in a thin‑liquidity environment, investors should compare it to the average 0.30‑0.40% of broad‑market ETFs.

How It Stacks Up

ETF (Ticker)	Expense Ratio	Index Type	Geographic Scope	Typical AUM	Typical Expense
DGLO (First Trust)	Not disclosed; likely 0.35‑0.55%	RBA US Deglobalization Index	U.S. only	< $10 M (launch)	~0.35‑0.55% (estimate)
iShares MSCI USA ESG Select ETF (SUSA)	0.15%	ESG‑screened U.S.	U.S.	$3 B+	0.15%
First Trust Cloud Computing (SKYY)	0.60%	Cloud‑computing thematic	Global	$800 M	0.60%
Invesco S&P 500 ESG (EFIX)	0.10%	Broad U.S. ESG	U.S.	$2 B	0.10%
RBA Global Deglobalization Index (no ETF)	N/A (index only)	N/A	N/A	N/A	N/A

What to watch: The official prospectus for DGLO (which will be released shortly after the launch) will list the exact expense ratio and any additional fees (e.g., 12‑b basis‑point “administrative fee” that some First Trust ETFs charge). Compare that figure directly to the 0.15%‑0.60% range typical of U.S.‑focused ETFs.

5. Practical Takeaways for an Investor

Factor	What the News Tells Us	What the Investor Should Do
Performance	No track record; index has been back‑tested at ~8‑9% annualized (2019‑2024).	Wait for at least 6‑12 months of price data before judging performance. Use the index’s historical returns as a baseline but consider that actual ETF returns will be lower after fees and tracking error.
Risk	High U.S. concentration, sector‑bias, lower liquidity at launch.	Check the prospectus for a full list of holdings; compute concentration ratios (top‑10 holdings weight). Use standard deviation and beta to the S&P 500 once the ETF has a 30‑day price history.
Fee	Not disclosed; likely 0.35‑0.55% based on First Trust’s other ETFs.	Read the final prospectus and compare the expense ratio to other thematic U.S. ETFs (most < 0.60%). If the fee is > 0.55% and the fund is thinly traded, the total cost of ownership may be higher than a broad-market ETF.
Liquidity	New fund – likely lower daily volume.	Limit position size (e.g., < 5% of daily volume) until the fund’s average daily volume (ADV) is established. Consider using a limit order to avoid market impact.
Strategic Fit	For investors who believe the U.S. will “re‑shoring” and “de‑globalize” (i.e., more domestic‑focused supply chains), DGLO offers a single‑ticker exposure that is more targeted than a broad‑market fund but less concentrated than a pure sector ETF.	Add as a small “tilt” in a diversified portfolio; don’t treat it as a core holding until the fund shows stable tracking and liquidity. Use it alongside a core U.S. market fund (e.g., VTI) and possibly a global emerging‑market fund to maintain diversification.
Tax	No specific information; but typical U.S. ETF tax treatment (qualified dividend, capital gains) applies.	Review the distribution policy (e.g., “distributions are likely to be quarterly and may be qualified dividends” as typical for First Trust ETFs).

6. Quick Reference Cheat‑Sheet

Feature	DGLO (First Trust)	Typical Competitor (e.g., SUSA, SKYY)	Typical Geopolitical‑Style ETF (e.g., iShares MSCI World ex‑U.S.)
Core Theme	U.S. de‑globalization (domestic‑focused)	U.S. ESG / Cloud‑Computing	Global‑country‑diversified (often emerging‑market)
Underlying Index	RBA U.S. Deglobalization Index	MSCI USA ESG, etc.	MSCI World ex‑US, etc.
Expense Ratio (est.)	≈ 0.35‑0.55% (estimate)	0.10‑0.60%	0.30‑0.75% (varies)
Historical Return (back‑tested)	~8‑9% (2019‑2024, index)	~8‑12% (broad U.S.)	~–2% to +12% (depending on region)
Tracking Error (expected)	0.5‑1.2% (first 2‑3 y)	<0.5% (large-cap)	0.6‑1.0% (thin‑ly traded)
Volatility (annual)	15‑18% (higher than S&P 500)	12‑13% (S&P 500‑like)	15‑20% (higher due to emerging‑market exposure)
Liquidity (first 12 mo)	Low (initial AUM < $10 M; likely < 50k shares ADV)	Medium–high (AUM > $500 M; > 1 M shares ADV)	Medium–high (AUM > $1 B; high ADV)
Geographic Concentration	100% U.S.	100% U.S. (for ESG/Cloud)	100% non‑U.S. (global)

7. Bottom‑Line Recommendation

If you already believe in a “de‑globalization” scenario (i.e., a U.S‑centric supply‑chain and lower overseas exposure), DGLO gives you a focused, single‑ticker way to get exposure without having to build a custom basket of U.S. companies.
Because there is no performance or fee data yet, treat DGLO as an exploratory/tilt position—not a core holding—until:
- The expense ratio is confirmed (preferably ≤ 0.45%).
- Liquidity improves (≥ 50k‑100k shares daily ADV).
- Tracking error stays below 1% and the fund’s net asset value (NAV) closely tracks the index.
Compare the fee to the low‑cost broad U.S. ETFs (0.10‑0.15% expense). If DGLO’s expense is higher, you are paying a premium for the thematic, de‑globalization tilt. Decide if that premium is justified by your conviction in the de‑globalization thesis.
Monitor the underlying index composition (e.g., top 10 holdings, concentration to any single sector). A high concentration (> 30% in one sector) is a red flag for higher volatility and sector‑specific risk.
Use DGLO alongside a diversified global core (e.g., a total‑world fund) and an emerging‑markets exposure if you want to balance U.S. domestic risk with global growth opportunities.

In short:

DGLO is a new, U.S.‑only, “de‑globalization” ETF that will likely have an expense ratio in the mid‑0.3%–0.5% range and will be less liquid and more sector‑concentrated than broad‑market ETFs. Its performance and risk can only be judged after the first 6‑12 months of trading. Compared to other **de‑globalization or geopolitical ETFs, it will likely track its index more tightly (similar tracking error to other First Trust ETFs), carry higher U.S. concentration risk, and potentially deliver higher returns if the de‑globalization trend plays out, but with higher volatility and higher liquidity risk at launch. Always read the final prospectus for the exact expense ratio, confirm the index methodology, and weigh the premium cost against your conviction in the underlying macro thesis.