Launched on 08/19/2003, the First Trust Value Line Dividend ETF (FVD) 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 $11.54 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. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
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. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value 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 0.65%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.44%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Utilities sector--about 21.90% of the portfolio. Industrials and Consumer Staples round out the top three.
Looking at individual holdings, Robert Half International Inc. (RHI) accounts for about 0.62% of total assets, followed by Crown Castle Inc. (CCI) and Avnet, Inc. (AVT).
The top 10 holdings account for about 6.08% 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 -1.37% so far this year and is down about -4.65% in the last one year (as of 08/22/2023). In the past 52-week period, it has traded between $35.61 and $41.46.
The ETF has a beta of 0.78 and standard deviation of 14.27% for the trailing three-year period, making it a medium risk choice in the space. With about 172 holdings, it effectively diversifies company-specific risk.
Alternatives
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 reasonable 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 iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $49.93 billion in assets, Vanguard Value ETF has $100.36 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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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Get it free >>First Trust Value Line Dividend ETF (FVD): ETF Research Reports
Avnet, Inc. (AVT) : Free Stock Analysis Report
Crown Castle Inc. (CCI) : Free Stock Analysis Report
Robert Half Inc. (RHI) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
