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Is iShares Select Dividend ETF (DVY) a Strong ETF Right Now?
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Launched on 11/03/2003, the iShares Select Dividend ETF (DVY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $18.66 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, DVY seeks to match the performance of the Dow Jones U.S. Select Dividend Index.
The iShares Dow Jones Select Dividend Index seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Select Dividend Index. This Index measures the performance of a selected group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.39% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.20%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector - about 26.30% of the portfolio. Financials and Energy round out the top three.
Looking at individual holdings, Oneok Inc (OKE - Free Report) accounts for about 2.55% of total assets, followed by Altria Group Inc (MO - Free Report) and At&t Inc (T - Free Report) .
DVY's top 10 holdings account for about 19.19% of its total assets under management.
Performance and Risk
So far this year, DVY return is roughly 28.95%, and it's up approximately 45.39% in the last one year (as of 11/05/2021). During this past 52-week period, the fund has traded between $85.42 and $123.06.
DVY has a beta of 0.94 and standard deviation of 25.41% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 104 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Select Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $57.31 billion in assets, Vanguard Value ETF has $88.03 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is iShares Select Dividend ETF (DVY) a Strong ETF Right Now?
Launched on 11/03/2003, the iShares Select Dividend ETF (DVY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $18.66 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, DVY seeks to match the performance of the Dow Jones U.S. Select Dividend Index.
The iShares Dow Jones Select Dividend Index seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Select Dividend Index. This Index measures the performance of a selected group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.39% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.20%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector - about 26.30% of the portfolio. Financials and Energy round out the top three.
Looking at individual holdings, Oneok Inc (OKE - Free Report) accounts for about 2.55% of total assets, followed by Altria Group Inc (MO - Free Report) and At&t Inc (T - Free Report) .
DVY's top 10 holdings account for about 19.19% of its total assets under management.
Performance and Risk
So far this year, DVY return is roughly 28.95%, and it's up approximately 45.39% in the last one year (as of 11/05/2021). During this past 52-week period, the fund has traded between $85.42 and $123.06.
DVY has a beta of 0.94 and standard deviation of 25.41% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 104 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares Select Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $57.31 billion in assets, Vanguard Value ETF has $88.03 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.