Новини

If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the First Trust Morningstar Dividend Leaders ETF (FDL), a passively managed exchange traded fund launched on 03/09/2006.

The fund is sponsored by First Trust Advisors. It has amassed assets over $3.94 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. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.45%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 4.43%.

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.

This ETF has heaviest allocation to the Financials sector--about 25.90% of the portfolio. Energy and Healthcare round out the top three.

Looking at individual holdings, Chevron Corporation (CVX) accounts for about 9.68% of total assets, followed by Verizon Communications Inc. (VZ) and Abbvie Inc. (ABBV).

The top 10 holdings account for about 58.77% of total assets under management.

Performance and Risk

FDL seeks to match the performance of the Morningstar Dividend Leaders Index before fees and expenses. The Morningstar Dividend Leaders Index consists of stocks listed on one of the three major exchanges, NYSE, NYSE Amex or Nasdaq, that have shown dividend consistency and dividend sustainability.

The ETF has gained about 5.91% so far this year and is up about 14.59% in the last one year (as of 05/06/2024). In the past 52-week period, it has traded between $31.58 and $38.48.

The ETF has a beta of 0.89 and standard deviation of 14.90% for the trailing three-year period, making it a medium risk choice in the space. With about 93 holdings, it effectively diversifies company-specific risk.

Alternatives

First Trust Morningstar Dividend Leaders 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, FDL is a sufficient 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 Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $54.65 billion in assets, Vanguard Value ETF has $112.51 billion. SCHD has an expense ratio of 0.06% 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.