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Should First Trust Morningstar Dividend Leaders ETF (FDL) Be on Your Investing Radar?
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The First Trust Morningstar Dividend Leaders ETF (FDL - Free Report) was launched on 03/09/2006, and is a passively managed exchange traded fund designed to offer 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 $4.49 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 usually have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have 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.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.45%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.95%.
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 Healthcare sector--about 21.50% of the portfolio. Financials and Consumer Staples round out the top three.
Looking at individual holdings, Abbvie Inc. (ABBV - Free Report) accounts for about 8.38% of total assets, followed by Verizon Communications Inc. (VZ - Free Report) and Chevron Corporation (CVX - Free Report) .
The top 10 holdings account for about 55.71% of total assets under management.
Performance and Risk
FDL seeks to match the performance of the Morningstar Dividend Leaders Index before fees and expenses. The Morningstar Dividend Leaders Index consists of stocks listed on one of the three major exchanges, NYSE, NYSE Amex or Nasdaq, that have shown dividend consistency and dividend sustainability.
The ETF has gained about 0.17% so far this year and is up roughly 17.60% in the last one year (as of 01/15/2025). In the past 52-week period, it has traded between $35.29 and $43.95.
The ETF has a beta of 0.88 and standard deviation of 14.93% for the trailing three-year period, making it a medium risk choice in the space. With about 96 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Morningstar Dividend Leaders 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, FDL 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 Schwab U.S. Dividend Equity ETF (SCHD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $66.40 billion in assets, Vanguard Value ETF has $129.12 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.
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Should First Trust Morningstar Dividend Leaders ETF (FDL) Be on Your Investing Radar?
The First Trust Morningstar Dividend Leaders ETF (FDL - Free Report) was launched on 03/09/2006, and is a passively managed exchange traded fund designed to offer 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 $4.49 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 usually have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have 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.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.45%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.95%.
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 Healthcare sector--about 21.50% of the portfolio. Financials and Consumer Staples round out the top three.
Looking at individual holdings, Abbvie Inc. (ABBV - Free Report) accounts for about 8.38% of total assets, followed by Verizon Communications Inc. (VZ - Free Report) and Chevron Corporation (CVX - Free Report) .
The top 10 holdings account for about 55.71% of total assets under management.
Performance and Risk
FDL seeks to match the performance of the Morningstar Dividend Leaders Index before fees and expenses. The Morningstar Dividend Leaders Index consists of stocks listed on one of the three major exchanges, NYSE, NYSE Amex or Nasdaq, that have shown dividend consistency and dividend sustainability.
The ETF has gained about 0.17% so far this year and is up roughly 17.60% in the last one year (as of 01/15/2025). In the past 52-week period, it has traded between $35.29 and $43.95.
The ETF has a beta of 0.88 and standard deviation of 14.93% for the trailing three-year period, making it a medium risk choice in the space. With about 96 holdings, it effectively diversifies company-specific risk.
Alternatives
First Trust Morningstar Dividend Leaders 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, FDL 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 Schwab U.S. Dividend Equity ETF (SCHD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $66.40 billion in assets, Vanguard Value ETF has $129.12 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.