ZACKSยท2025-07-24 11:21Core Insights - The First Trust Morningstar Dividend Leaders ETF (FDL) is designed to provide broad exposure to the Large Cap Value segment of the US equity market, with assets exceeding $5.65 billion, making it one of the larger ETFs in this category [1] Group 1: Large Cap Value Overview - Large cap companies typically have a market capitalization above $10 billion, offering a stable investment option with lower risk and more reliable cash flows compared to mid and small cap companies [2] - Value stocks are characterized by lower than average price-to-earnings and price-to-book ratios, as well as lower sales and earnings growth rates. Historically, value stocks have outperformed growth stocks in nearly all markets, although growth stocks tend to perform better in strong bull markets [3] Group 2: Costs and Performance - The ETF has an annual operating expense ratio of 0.43%, which is competitive within its peer group, and a 12-month trailing dividend yield of 4.58% [4] - FDL aims to match the performance of the Morningstar Dividend Leaders Index, which includes stocks with consistent and sustainable dividends. The ETF has gained approximately 10.15% year-to-date and 15.34% over the past year, with a trading range of $38.19 to $43.95 in the last 52 weeks [7] Group 3: Sector Exposure and Holdings - The ETF has a significant allocation to the Energy sector, comprising about 25.30% of the portfolio, followed by Healthcare and Consumer Staples [5] - Exxon Mobil Corporation (XOM) represents approximately 10.20% of total assets, with the top 10 holdings accounting for about 55.23% of total assets under management [6] Group 4: Risk and Alternatives - FDL has a beta of 0.72 and a standard deviation of 15.02% over the trailing three-year period, indicating a medium risk profile. The ETF holds about 101 stocks, effectively diversifying company-specific risk [8] - Alternatives to FDL include the Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV), which track similar indices but have larger asset bases and lower expense ratios of 0.06% and 0.04%, respectively [10] Group 5: Market Trends - Passively managed ETFs are gaining popularity among both institutional and retail investors due to their low cost, transparency, flexibility, and tax efficiency, making them suitable for long-term investment strategies [11]