The First Trust Value Line Dividend ETF (
FVD Quick Quote FVD - Free Report) was launched on 08/19/2003, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market. What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
FVD is managed by First Trust Advisors, and this fund has amassed over $11.76 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, FVD 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.67% for FVD, making it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.92%.
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 21.30% of the portfolio --while Industrials and Financials round out the top three.
Taking into account individual holdings, Eli Lilly And Company (
LLY Quick Quote LLY - Free Report) accounts for about 0.58% of the fund's total assets, followed by Caterpillar Inc. ( CAT Quick Quote CAT - Free Report) and Sempra Energy ( SRE Quick Quote SRE - Free Report) .
FVD's top 10 holdings account for about 5.52% of its total assets under management.
Performance and Risk
Year-to-date, the First Trust Value Line Dividend ETF has lost about -8.60% so far, and is down about -0.41% over the last 12 months (as of 06/30/2022). FVD has traded between $37.24 and $43.09 in this past 52-week period.
The ETF has a beta of 0.79 and standard deviation of 22.33% for the trailing three-year period, making it a medium risk choice in the space. With about 204 holdings, it effectively diversifies company-specific risk.
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 Quick Quote IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $51.20 billion in assets, Vanguard Value ETF has $93.87 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.
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.