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Is First Trust Value Line Dividend ETF (FVD) a Strong ETF Right Now?
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The First Trust Value Line Dividend ETF (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?
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.
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.
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 $11.96 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for FVD are 0.65%, which makes it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.39%.
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.
Representing 21.50% of the portfolio, the fund has heaviest allocation to the Utilities sector; Industrials and Consumer Staples round out the top three.
Taking into account individual holdings, Intel Corporation (INTC - Free Report) accounts for about 0.68% of the fund's total assets, followed by The Kroger Co. (KR - Free Report) and Sanofi (adr) (SNY - Free Report) .
The top 10 holdings account for about 6.47% of total assets under management.
Performance and Risk
The ETF return is roughly 0.71% and it's up approximately 4.41% so far this year and in the past one year (as of 07/11/2023), respectively. FVD has traded between $35.61 and $42.23 during this last 52-week period.
The ETF has a beta of 0.79 and standard deviation of 14.33% for the trailing three-year period, making it a medium risk choice in the space. With about 173 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 $50.75 billion in assets, Vanguard Value ETF has $98.92 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?
The First Trust Value Line Dividend ETF (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?
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.
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.
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 $11.96 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for FVD are 0.65%, which makes it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.39%.
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.
Representing 21.50% of the portfolio, the fund has heaviest allocation to the Utilities sector; Industrials and Consumer Staples round out the top three.
Taking into account individual holdings, Intel Corporation (INTC - Free Report) accounts for about 0.68% of the fund's total assets, followed by The Kroger Co. (KR - Free Report) and Sanofi (adr) (SNY - Free Report) .
The top 10 holdings account for about 6.47% of total assets under management.
Performance and Risk
The ETF return is roughly 0.71% and it's up approximately 4.41% so far this year and in the past one year (as of 07/11/2023), respectively. FVD has traded between $35.61 and $42.23 during this last 52-week period.
The ETF has a beta of 0.79 and standard deviation of 14.33% for the trailing three-year period, making it a medium risk choice in the space. With about 173 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 $50.75 billion in assets, Vanguard Value ETF has $98.92 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.