First Trust Advisors L.P. (“First Trust”) today announced that First Trust Value Line® Dividend Index Fund (NYSE Arca: FVD), an index exchange-traded fund advised by First Trust, celebrated its 10-year anniversary while outperforming the S&P 500 Index. Over the past decade ending 8/30/13, the fund outperformed the S&P 500 Index by 2.0% annually. Among its accomplishments, the fund has achieved a 5-Star Overall Morningstar Rating™ as of 8/30/13, among 1028 funds in the Large Value category based on the ETF’s Morningstar Risk-Adjusted Return measure.§
“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”
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,” said Ryan Issakainen, Senior Vice President and ETF Strategist at First Trust. More important than the simple dividend yield of the various ETFs, are the strategies in place to allocate into companies based off of their dividend policy, in our opinion. 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. This methodology has rewarded investors as FVD has performed well as compared to the S&P 500 over various time periods ending 8/30/13. Since its inception on August 19, 2003, FVD realized an 8.60% average annual total return vs. the S&P 500’s 7.16%. Over the 5-year period, the fund had an average annual total return of 9.31% vs. the S&P 500’s performance of 7.32%. The fund’s 30-day SEC yield† was 2.68% as of 8/30/13.
About the First Trust Value Line® Dividend Index Fund (FVD)
This exchange-traded fund seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the Value Line® Dividend Index™.
The index begins with the universe of stocks that Value Line® gives a Safety™ Ranking of #1 or #2 using the Value Line® Safety™ Ranking System. All registered investment companies, limited partnerships and foreign securities not listed in the U.S. are removed from this universe. From those stocks, Value Line® selects those companies with a higher than average dividend yield, as compared to the indicated dividend yield of the Standard & Poor’s 500 Composite Stock Price Index. Value Line® then eliminates those companies with an equity market capitalization of less than $1 billion. The index seeks to be equally weighted in each of the securities in the index. The index is rebalanced on the application of the above model on a monthly basis.
Month End Performance (%)
Since Fund
as of 8/30/13
Quarter
YTD
1 Yr.
3 Yr.
5 Yr.
10 Yr.
Inception
Fund Performance*
NAV
0.33
15.06
17.78
16.95
9.31
9.13
8.60
After Tax Held
0.03
14.45
16.51
15.79
8.17
7.42
6.91
After Tax Sold
0.19
8.52
10.14
12.83
6.81
6.75
6.30
Market Price
0.28
15.10
17.64
16.92
9.31
8.63
8.60
Index Performance
Value Line® Dividend Index**
0.52
15.65
18.63
17.88
10.17
N/A
N/A
Dow Jones Select Dividend IndexSM
1.12
15.18
17.72
18.26
8.76
N/A
N/A
S&P 500 Index
0.67
16.15
18.70
18.40
7.32
7.12
7.16
Quarter End Performance (%)
Since Fund
as of 6/28/13
Quarter
YTD
1 Yr.
3 Yr.
5 Yr.
Inception
Fund Performance*
NAV
1.21
13.89
19.08
18.17
9.99
8.64
After Tax Held
0.91
13.28
17.79
17.00
8.84
6.92
After Tax Sold
0.68
7.86
10.89
13.82
7.36
6.32
Market Price
1.21
13.92
19.15
18.17
9.99
8.64
Index Performance
Value Line® Dividend Index**
1.46
14.39
20.00
19.14
10.87
N/A
Dow Jones Select Dividend IndexSM
1.86
13.85
18.45
19.36
10.38
N/A
S&P 500 Index
2.91
13.82
20.60
18.45
7.01
7.07
Gross Expense Ratio^: 0.76%
Net Expense Ratio: 0.70%
Performance data quoted represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares when sold or redeemed, may be worth more or less than their original cost. You can obtain performance information which is current through the most recent month-end by visiting ftportfolios.com.
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