Launched on 08/19/2003, the First Trust Value Line Dividend ETF (
FVD Quick Quote FVD - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by First Trust Advisors. It has amassed assets over $10.35 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
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 counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.65%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.54%.
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.
This ETF has heaviest allocation to the Utilities sector--about 22.30% of the portfolio. Industrials and Consumer Staples round out the top three.
Looking at individual holdings, Brady Corporation (
BRC Quick Quote BRC - Free Report) accounts for about 0.68% of total assets, followed by Sensient Technologies Corporation ( SXT Quick Quote SXT - Free Report) and International Flavors & Fragrances Inc. ( IFF Quick Quote IFF - Free Report) .
The top 10 holdings account for about 6.42% of total assets under management.
Performance and Risk
FVD 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.
The ETF has lost about -6.60% so far this year and it's up approximately 3.90% in the last one year (as of 10/23/2023). In the past 52-week period, it has traded between $36.62 and $41.46.
The ETF has a beta of 0.79 and standard deviation of 14.07% for the trailing three-year period, making it a medium risk choice in the space. With about 170 holdings, it effectively diversifies company-specific risk.
First Trust Value Line Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FVD is a sufficient option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard High Dividend Yield ETF (
VYM Quick Quote VYM - Free Report) and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) track a similar index. While Vanguard High Dividend Yield ETF has $46.92 billion in assets, Vanguard Value ETF has $96.11 billion. VYM has an expense ratio of 0.06% and VTV charges 0.04%. Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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.