Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the First Trust Value Line Dividend ETF (FVD) is a smart beta exchange traded fund launched on 08/19/2003.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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
Managed by First Trust Advisors, FVD has amassed assets over $9.04 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, FVD seeks to match the performance of the Value Line Dividend Index.
The Value Line Dividend Index is a modified equal dollar weighted index comprised of U.S. exchange listed securities of companies that pay above-average dividends and have potential for capital appreciation.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for FVD are 0.61%, which makes it one of the most expensive products in the space.
FVD's 12-month trailing dividend yield is 2.25%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FVD, it has heaviest allocation in the Industrials sector --about 20.8% of the portfolio --while Utilities and Financials round out the top three.
Taking into account individual holdings, Us Dollar ($USD) accounts for about 0.72% of the fund's total assets, followed by Rogers Communications Inc. (class B) (RCI) and Genpact Limited (G).
Its top 10 holdings account for approximately 4.81% of FVD's total assets under management.
Performance and Risk
The ETF return is roughly 4.97% so far this year and was up about 10.03% in the last one year (as of 08/06/2025). In the past 52-week period, it has traded between $40.62 and $46.70
The fund has a beta of 0.72 and standard deviation of 13.02% for the trailing three-year period, which makes FVD a medium risk choice in this particular space. With about 238 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) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $69.62 billion in assets, Vanguard Value ETF has $138.82 billion. SCHD has an expense ratio of 0.06% and VTV changes 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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First Trust Value Line Dividend ETF (FVD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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