A smart beta exchange traded fund, the First Trust Value Line Dividend ETF (FVD) 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?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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. FVD has been able to amass assets over $8.34 billion, making 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.62% for this ETF, which makes it one of the most expensive products in the space.
It's 12-month trailing dividend yield comes in at 2.19%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
FVD's heaviest allocation is in the Financials sector, which is about 21% of the portfolio. Its Industrials and Utilities round out the top three.
When you look at individual holdings, Arthur J. Gallagher & Co. (AJG) accounts for about 0.47% of the fund's total assets, followed by International Business Machines Corporation (IBM) and Jack Henry & Associates, Inc. (JKHY).
Its top 10 holdings account for approximately 4.5% of FVD's total assets under management.
Performance and Risk
The ETF has added roughly 11.78% and was up about 12.33% so far this year and in the past one year (as of 08/26/2026), respectively. FVD has traded between $45.00 and $51.05 during this last 52-week period.
The fund has a beta of 0.64 and standard deviation of 11.20% for the trailing three-year period, which makes FVD a medium risk choice in this particular space. With about 253 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 Morningstar Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $112.07 billion in assets, Vanguard Morningstar Value ETF has $193.81 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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