Published Mon, 30 Nov 2020 05:20:21 -0500 on Seeking Alpha
Seeking AlphaETF AnalysisDividend ETF Review: FVDNov. 30, 2020 5:20 AM ET|| About: First Trust Value Line Dividend ETF (FVD)by: Fred PiardFred Piard Quantitative Risk & ValueExclusive market risk indicator paired with data-driven model portfolios.SummaryFVD strategy and performance.
Comparing FVD with simpler strategies.
Scanning FVD with quality metrics.
FVD strategy and performance
The First Trust Value Line® Dividend Index Fund (NYSEARCA: FVD) is a quantitative strategy ETF following systematic rules. The SEC Yield of FVD is currently 2.57%.
To be eligible as FVD holdings, stocks must be listed in the US, have more than $1 billion in market capitalization, a higher dividend yield than the S&P 500 (SPY), and a good Value Line Safety RankingTM. Investment companies and limited partnerships are excluded. The fund seeks to rebalance holdings in equal weight every month.
As described on Value Line website, the safety rank takes into account technical and fundamental factors:
The Value Line Safety Rank measures the total risk of a stock relative to the approximately 1,700 other stocks. It is derived from a stock's Price Stability rank and from the Financial Strength rating of a company, both shown in the lower right hand corner of each page in Ratings & Reports. Safety ranks are also given on a scale from 1 (Safest) to 5 (Riskiest).
The rank cutoff for FVD holdings is 2.
Since inception (8/19/2003), FVD has been very close to SPY in annualized return and risk-adjusted performance (Sharpe ratio). It lags the equal-weight S&P 500 (RSP) in return, but beats it in risk-adjusted performance. It also lags the set of S&P 500 stocks with an above-average yield and beats it in risk-adjusted performance. The next table shows detailed data.
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