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Is First Trust Value Line Dividend ETF (FVD) a Strong ETF Right Now?
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A smart beta exchange traded fund, the First Trust Value Line Dividend ETF (FVD - Free Report) debuted on 08/19/2003, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
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 $9.77 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.60% for FVD, making it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.09%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 20.30% of the portfolio. Utilities and Consumer Staples round out the top three.
Looking at individual holdings, Canadian Imperial Bank Of Commerce (CM - Free Report) accounts for about 0.52% of total assets, followed by Royal Bank Of Canada (RY - Free Report) and Norfolk Southern Corporation (NSC - Free Report) .
The top 10 holdings account for about 5.07% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Value Line Dividend ETF has added about 12.45% so far, and is up about 18.41% over the last 12 months (as of 09/23/2024). FVD has traded between $36.09 and $45.26 in this past 52-week period.
The fund has a beta of 0.79 and standard deviation of 13.47% for the trailing three-year period, which makes FVD a medium risk choice in this particular space. With about 209 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $61.03 billion in assets, Vanguard Value ETF has $127.29 billion. SCHD has an expense ratio of 0.06% 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?
A smart beta exchange traded fund, the First Trust Value Line Dividend ETF (FVD - Free Report) debuted on 08/19/2003, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
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 $9.77 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.60% for FVD, making it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.09%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 20.30% of the portfolio. Utilities and Consumer Staples round out the top three.
Looking at individual holdings, Canadian Imperial Bank Of Commerce (CM - Free Report) accounts for about 0.52% of total assets, followed by Royal Bank Of Canada (RY - Free Report) and Norfolk Southern Corporation (NSC - Free Report) .
The top 10 holdings account for about 5.07% of total assets under management.
Performance and Risk
Year-to-date, the First Trust Value Line Dividend ETF has added about 12.45% so far, and is up about 18.41% over the last 12 months (as of 09/23/2024). FVD has traded between $36.09 and $45.26 in this past 52-week period.
The fund has a beta of 0.79 and standard deviation of 13.47% for the trailing three-year period, which makes FVD a medium risk choice in this particular space. With about 209 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $61.03 billion in assets, Vanguard Value ETF has $127.29 billion. SCHD has an expense ratio of 0.06% 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.