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Is First Trust Value Line Dividend ETF (FVD) a Strong ETF Right Now?
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Making its debut on 08/19/2003, smart beta exchange traded fund First Trust Value Line Dividend ETF (FVD - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $12.43 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the Value Line Dividend Index before fees and expenses.
The Value Line Dividend Index is a modified equal dollar weighted index comprised of U.S. exchange listed securities of companies that pay above-average dividends and have potential for capital appreciation.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for FVD are 0.70%, which makes it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.85%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FVD, it has heaviest allocation in the Utilities sector --about 19.40% of the portfolio --while Industrials and Financials round out the top three.
Looking at individual holdings, Cisco Systems, Inc, (CSCO - Free Report) accounts for about 0.55% of total assets, followed by Elbit Systems Ltd, (ESLT - Free Report) and International Business Machines Corporation (IBM - Free Report) .
Its top 10 holdings account for approximately 5.35% of FVD's total assets under management.
Performance and Risk
The ETF has lost about -4.90% and was up about 15.70% so far this year and in the past one year (as of 02/21/2022), respectively. FVD has traded between $35.29 and $43.09 during this last 52-week period.
The fund has a beta of 0.81 and standard deviation of 21.57% for the trailing three-year period, which makes FVD a medium risk choice in this particular space. With about 207 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Value Line Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $56.54 billion in assets, Vanguard Value ETF has $92.68 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
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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Is First Trust Value Line Dividend ETF (FVD) a Strong ETF Right Now?
Making its debut on 08/19/2003, smart beta exchange traded fund First Trust Value Line Dividend ETF (FVD - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by First Trust Advisors. It has amassed assets over $12.43 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the Value Line Dividend Index before fees and expenses.
The Value Line Dividend Index is a modified equal dollar weighted index comprised of U.S. exchange listed securities of companies that pay above-average dividends and have potential for capital appreciation.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for FVD are 0.70%, which makes it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 1.85%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FVD, it has heaviest allocation in the Utilities sector --about 19.40% of the portfolio --while Industrials and Financials round out the top three.
Looking at individual holdings, Cisco Systems, Inc, (CSCO - Free Report) accounts for about 0.55% of total assets, followed by Elbit Systems Ltd, (ESLT - Free Report) and International Business Machines Corporation (IBM - Free Report) .
Its top 10 holdings account for approximately 5.35% of FVD's total assets under management.
Performance and Risk
The ETF has lost about -4.90% and was up about 15.70% so far this year and in the past one year (as of 02/21/2022), respectively. FVD has traded between $35.29 and $43.09 during this last 52-week period.
The fund has a beta of 0.81 and standard deviation of 21.57% for the trailing three-year period, which makes FVD a medium risk choice in this particular space. With about 207 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Value Line Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $56.54 billion in assets, Vanguard Value ETF has $92.68 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
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.