The First Trust Value LineDividend Index Fund (FVD), an index exchange-traded fund advised by First Trust, has celebrated its 10-year anniversary while outperforming the S&P 500 Index.
Over the past decade ending 30 August, the fund outperformed the S&P 500 Index by 2.0 per cent annually.
The fund has achieved a 5-Star Overall Morningstar Rating as of 30 August, among 1,028 funds in the Large Value category based on the ETF’s Morningstar Risk-Adjusted Return measure.
Dividend-paying ETF strategies have grown in popularity with investors seeking income in a historically low interest rate environment.
“While the field has become more crowded over the past few years, FVD has distinguished itself for over a decade as an effective tool for investors seeking below-average volatility with above-average dividends,” says Ryan Issakainen, senior vice president and ETF strategist at First Trust.
The methodology of the index that FVD tracks is not focused on finding the highest dividend-paying stocks. Rather, the index looks for quality companies as determined by Value Line’s safety rankings that have an above-average dividend yield when compared to the S&P 500 dividend yield.
One important lesson investors have learned is that “chasing yield” is not always the best approach when implementing a dividend strategy. FVD seeks to counter this by providing dividend potential with a total return approach.
