FDL, the First Trust Morningstar Dividend Leaders Index Fund, is one of the quieter corners of the ETF market this week — yet beneath the calm price action, the lending market is telling a mildly interesting story.
The fund gained just over 2% on the week to close at $50.74, a steady performance consistent with its income-oriented mandate. Short interest is negligible by any measure — 0.25% of float, down 14% over the past week after briefly spiking mid-month. At that level, short positioning is essentially noise: the fund simply isn't a vehicle that attracts meaningful directional bets against it.
The more interesting data point is in the borrow market. Cost to borrow has quietly climbed from around 3.5% in mid-June to 5.15% now — a rise of nearly 50% in five weeks. That's a notable move for an ETF that tracks large-cap dividend payers, where borrow costs are typically thin. The likely explanation is routine ETF arbitrage activity or short-term hedging around dividend capture strategies, rather than any structural short conviction. Availability remains loose at roughly 435% — meaning shares available to lend dwarf the current short interest by more than four-to-one — so the borrow cost rise hasn't translated into genuine scarcity. The 52-week low on availability was 11%, so today's reading is well off any stress level.
Options positioning is almost entirely call-sided. The put/call ratio is 0.17, barely above its 20-day average of 0.15, and only fractionally above the z-score midpoint. The 52-week low on that ratio is 0.0, which captures periods when there were effectively no puts outstanding at all. Taken together, options and borrow data both describe a market with no active bearish conviction in FDL — holders appear content to collect the dividend and move on.
On the income side, the fund paid $0.47 per share in June 2026 and $0.40 in March, distributions that are running well above comparable payments from 2021 and 2022, when quarterly dividends ran closer to $0.24-$0.28. That step-up in income reflects both the underlying portfolio's dividend growth and the higher yield environment persisting through 2025-26. The ORTEX short score of 44.8 is mid-range and has been broadly stable across the past ten sessions, ranging between 34 and 47 — no meaningful directional signal either way.
The primary thing to monitor going forward is whether the gradual rise in borrow costs persists into the next quarterly dividend cycle, and whether that draws any incremental hedging activity from dividend-capture traders around the ex-date.
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