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Is First Trust Value Line Dividend ETF (FVD) a Strong ETF Right Now?
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Launched on 08/19/2003, the First Trust Value Line Dividend ETF (FVD - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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.
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.
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
Because the fund has amassed over $11.72 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. FVD is managed by First Trust Advisors. This particular fund, 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
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 0.67%, which makes it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.08%.
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.
FVD's heaviest allocation is in the Utilities sector, which is about 18.40% of the portfolio. Its Industrials and Financials round out the top three.
Looking at individual holdings, Otter Tail Corporation (OTTR - Free Report) accounts for about 0.58% of total assets, followed by Blackrock, Inc. (BLK - Free Report) and Watsco, Inc. (WSO - Free Report) .
The top 10 holdings account for about 5.54% of total assets under management.
Performance and Risk
The ETF has lost about -10.25% and is down about -7.15% so far this year and in the past one year (as of 11/04/2022), respectively. FVD has traded between $35.61 and $43.09 during this last 52-week period.
FVD has a beta of 0.79 and standard deviation of 22.91% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 200 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 $51.72 billion in assets, Vanguard Value ETF has $99.37 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.
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?
Launched on 08/19/2003, the First Trust Value Line Dividend ETF (FVD - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
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.
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.
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
Because the fund has amassed over $11.72 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. FVD is managed by First Trust Advisors. This particular fund, 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
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 0.67%, which makes it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.08%.
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.
FVD's heaviest allocation is in the Utilities sector, which is about 18.40% of the portfolio. Its Industrials and Financials round out the top three.
Looking at individual holdings, Otter Tail Corporation (OTTR - Free Report) accounts for about 0.58% of total assets, followed by Blackrock, Inc. (BLK - Free Report) and Watsco, Inc. (WSO - Free Report) .
The top 10 holdings account for about 5.54% of total assets under management.
Performance and Risk
The ETF has lost about -10.25% and is down about -7.15% so far this year and in the past one year (as of 11/04/2022), respectively. FVD has traded between $35.61 and $43.09 during this last 52-week period.
FVD has a beta of 0.79 and standard deviation of 22.91% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 200 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 $51.72 billion in assets, Vanguard Value ETF has $99.37 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.
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.