Is First Trust Value Line Dividend ETF (FVD) a Strong ETF Right Now?

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?

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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

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

Managed by First Trust Advisors, FVD has amassed assets over $9.10 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

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Annual operating expenses for FVD are 0.60%, which makes it one of the most expensive products in the space.

FVD's 12-month trailing dividend yield is 2.33%.

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.

For FVD, it has heaviest allocation in the Industrials sector --about 22% of the portfolio --while Utilities and Consumer Staples round out the top three.

When you look at individual holdings, Sensient Technologies Corporation (SXT) accounts for about 0.55% of the fund's total assets, followed by Taiwan Semiconductor Manufacturing Company Ltd. (adr) (TSM) and Johnson Controls International Plc (JCI).

The top 10 holdings account for about 5.12% of total assets under management.

Performance and Risk

Year-to-date, the First Trust Value Line Dividend ETF has added roughly 3.14% so far, and it's up approximately 11.61% over the last 12 months (as of 06/02/2025). FVD has traded between $40.45 and $46.70 in this past 52-week period.

The fund has a beta of 0.74 and standard deviation of 13.54% for the trailing three-year period, which makes FVD a medium risk choice in this particular space. With about 222 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 $68.13 billion in assets, Vanguard Value ETF has $133.45 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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This article originally published on Zacks Investment Research (zacks.com).

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