Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
Blog Home

  Staying the Course with FVD
Posted Under: ETFs

Emotional decision-making ranks high on the list of obstacles that often prevent investors from achieving their financial goals and objectives.  The fear of incurring losses evokes a desire to sell after prices have dropped, while the fear of missing out on gains evokes a desire to buy after prices have risen.  Volatility acts as a catalyst to evoke emotional decision-making by creating a sense of urgency; investors may feel that decisions must be made in the heat of the moment, because prices are moving quickly!

In our opinion, emotional decision-making has been a root cause of many investor decisions to sell equity exchange-traded funds (ETFs) in 2016, as volatility has returned to the equity markets, accompanied by negative returns.  During the month of January, net outflows for US equity and sector ETFs totaled $14.1 billion1, as the average level of the CBOE Volatility Index surged to 23.7 (compared to an average of 16.7 in 2015)2, and the S&P 500 Index declined by 5%.

Such environments present a fresh opportunity to highlight the virtue of strategies designed to provide less volatile exposure to stocks, such as the First Trust Value Line® Dividend Index Fund (FVD).  In the context of a diversified3 investment portfolio, we believe this strategy may help investors "stay the course" and avoid making counterproductive emotional decisions.

FVD is an ETF that seeks to track the Value Line® Dividend Index.  This strategy builds upon the Value Line® SafetyTM Ranking System to select a portfolio of stocks traded on US exchanges with low volatility, strong balance sheets, and above average dividend yields.  The portfolio is equally weighted and rebalanced monthly.

Click Here to continue reading.

¹Source: Morningstar.
²Source: Bloomberg.
3While diversification is intended to spread risk among a greater number of holdings, this strategy does not guarantee a profit or protect against potential losses.

Posted on Monday, February 22, 2016 @ 2:32 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
Dave McGarel
CIO, COO | Bio
  1. Market Minute
Bill Housey
Senior Portfolio Manager | Bio
  1. Income Insights
Ryan Issakainen
ETF Strategist | Bio
  1. ETF Data Watch
  2. ETF Observations
  3. Inside First Trust ETFs
  4. First Trust ROI Podcast
Jeff Margolin
Closed-End Fund Analyst | Bio
  1. Closed-End Fund Quarterly Commentary
Client Resource Kits
  1. Alternatives
  2. Equity
  3. Fixed-Income
  4. Markets In Perspective
  5. Investment Themes
Other Newsletters
  1. Alternatives Update
  2. Housing Tracker
  3. Commercial Real Estate Tracker
  4. Equity Newsletter
  5. Weekly Market Commentary
  6. Weekly Market Watch
Subscribe To Receive Email

Robust Growth for Municipal Bond ETFs in 2015
The Return of Volatility and the Case for Earnings Quality
Third Quater 2015 CEF Review
Diversify Your Short Duration Income Portfolio
Questions to Ask Your "Smart Beta" ETF
Second Quater 2015 CEF Review
Inside First Trust ETFs: A Snapshot of Q1 Flows and Trends
First Quarter 2015 CEF Review
Two Trillion Dollars and Counting…
Technology Dividends — A Missing Ingredient in Your Equity Income ETF
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.