Making its debut on 08/19/2003, smart beta exchange traded fund First Trust Value Line Dividend ETF (FVD) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by First Trust Advisors, and has been able to amass over $8.65 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.61%, making it one of the most expensive products in the space.
FVD's 12-month trailing dividend yield is 2.20%.
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.
FVD's heaviest allocation is in the Utilities sector, which is about 18.7% of the portfolio. Its Financials and Industrials round out the top three.
When you look at individual holdings, The Hershey Company (HSY) accounts for about 0.49% of the fund's total assets, followed by Verizon Communications Inc. (VZ) and Gsk Plc (adr) (GSK).
Its top 10 holdings account for approximately 4.71% of FVD's total assets under management.
Performance and Risk
The ETF has gained about 7.14% so far this year and is up roughly 12.75% in the last one year (as of 02/19/2026). In the past 52-week period, it has traded between $40.62 and $49.62
FVD has a beta of 0.71 and standard deviation of 11.23% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 239 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 $84.01 billion in assets, Vanguard Value ETF has $170.37 billion. SCHD has an expense ratio of 0.06% and VTV changes 0.03%.
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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