The First Trust Value Line Dividend ETF (
FVD Quick Quote 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?
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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
Managed by First Trust Advisors, FVD has amassed assets over $12.21 billion, making 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.67% for FVD, making it one of the most expensive products in the space.
FVD's 12-month trailing dividend yield is 1.88%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For FVD, it has heaviest allocation in the Utilities sector --about 22% of the portfolio --while Industrials and Financials round out the top three.
Looking at individual holdings, T. Rowe Price Group, Inc. (
TROW Quick Quote TROW - Free Report) accounts for about 0.56% of total assets, followed by The Clorox Company ( CLX Quick Quote CLX - Free Report) and Duke Realty Corporation .
Its top 10 holdings account for approximately 5.48% of FVD's total assets under management.
Performance and Risk
The ETF has lost about -6.80% so far this year and is down about -2.83% in the last one year (as of 09/02/2022). In the past 52-week period, it has traded between $37.24 and $43.09.
The ETF has a beta of 0.77 and standard deviation of 22.37% for the trailing three-year period, making it a medium risk choice in the space. With about 194 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 $51.71 billion in assets, Vanguard Value ETF has $97.56 billion. IWD has an expense ratio of 0.18% 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.