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Is First Trust Value Line Dividend ETF (FVD) a Strong ETF Right Now?
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The First Trust Value Line Dividend ETF (FVD - Free Report) made its debut on 08/19/2003, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by First Trust Advisors, FVD has amassed assets over $11.51 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. FVD, before fees and expenses, seeks to match the performance of the Value Line Dividend Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.65%.
FVD's 12-month trailing dividend yield is 2.42%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 21.80% of the portfolio, the fund has heaviest allocation to the Utilities sector; Industrials and Consumer Staples round out the top three.
Taking into account individual holdings, Robert Half International Inc. (RHI - Free Report) accounts for about 0.62% of the fund's total assets, followed by Crown Castle Inc. (CCI - Free Report) and Avnet, Inc. (AVT - Free Report) .
The top 10 holdings account for about 6.08% of total assets under management.
Performance and Risk
So far this year, FVD has lost about -0.42%, and is up about 2.23% in the last one year (as of 09/15/2023). During this past 52-week period, the fund has traded between $35.61 and $41.46.
The ETF has a beta of 0.79 and standard deviation of 14.12% for the trailing three-year period, making it a medium risk choice in the space. With about 172 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 $50.97 billion in assets, Vanguard Value ETF has $102.27 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?
The First Trust Value Line Dividend ETF (FVD - Free Report) made its debut on 08/19/2003, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by First Trust Advisors, FVD has amassed assets over $11.51 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. FVD, before fees and expenses, seeks to match the performance of the Value Line Dividend Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.65%.
FVD's 12-month trailing dividend yield is 2.42%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 21.80% of the portfolio, the fund has heaviest allocation to the Utilities sector; Industrials and Consumer Staples round out the top three.
Taking into account individual holdings, Robert Half International Inc. (RHI - Free Report) accounts for about 0.62% of the fund's total assets, followed by Crown Castle Inc. (CCI - Free Report) and Avnet, Inc. (AVT - Free Report) .
The top 10 holdings account for about 6.08% of total assets under management.
Performance and Risk
So far this year, FVD has lost about -0.42%, and is up about 2.23% in the last one year (as of 09/15/2023). During this past 52-week period, the fund has traded between $35.61 and $41.46.
The ETF has a beta of 0.79 and standard deviation of 14.12% for the trailing three-year period, making it a medium risk choice in the space. With about 172 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 $50.97 billion in assets, Vanguard Value ETF has $102.27 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.