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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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
FVD is managed by First Trust Advisors, and this fund has amassed over $9.89 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
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.
Annual operating expenses for this ETF are 0.60%, making it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.14%.
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 19.90% of the portfolio, the fund has heaviest allocation to the Utilities sector; Industrials and Consumer Staples round out the top three.
Looking at individual holdings, Garmin Ltd. (GRMN - Free Report) accounts for about 0.56% of total assets, followed by Booz Allen Hamilton Holding Corporation (BAH - Free Report) and Altria Group, Inc. (MO - Free Report) .
The top 10 holdings account for about 5.17% of total assets under management.
Performance and Risk
The ETF has gained about 15.72% so far this year and is up about 22.04% in the last one year (as of 11/25/2024). In the past 52-week period, it has traded between $38.62 and $46.24.
The ETF has a beta of 0.79 and standard deviation of 13.49% for the trailing three-year period, making it a medium risk choice in the space. With about 217 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 $66.93 billion in assets, Vanguard Value ETF has $132.99 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
FVD is managed by First Trust Advisors, and this fund has amassed over $9.89 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
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.
Annual operating expenses for this ETF are 0.60%, making it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.14%.
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 19.90% of the portfolio, the fund has heaviest allocation to the Utilities sector; Industrials and Consumer Staples round out the top three.
Looking at individual holdings, Garmin Ltd. (GRMN - Free Report) accounts for about 0.56% of total assets, followed by Booz Allen Hamilton Holding Corporation (BAH - Free Report) and Altria Group, Inc. (MO - Free Report) .
The top 10 holdings account for about 5.17% of total assets under management.
Performance and Risk
The ETF has gained about 15.72% so far this year and is up about 22.04% in the last one year (as of 11/25/2024). In the past 52-week period, it has traded between $38.62 and $46.24.
The ETF has a beta of 0.79 and standard deviation of 13.49% for the trailing three-year period, making it a medium risk choice in the space. With about 217 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 $66.93 billion in assets, Vanguard Value ETF has $132.99 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.