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Is iShares Select Dividend ETF (DVY) a Strong ETF Right Now?
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The iShares Select Dividend ETF (DVY - Free Report) was launched on 11/03/2003, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
DVY is managed by Blackrock, and this fund has amassed over $22.19 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the Dow Jones U.S. Select Dividend Index before fees and expenses.
The Dow Jones U.S. Select Dividend 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.38%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.96%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
DVY's heaviest allocation is in the Utilities sector, which is about 27.60% of the portfolio. Its Financials and Energy round out the top three.
When you look at individual holdings, Oneok Inc (OKE - Free Report) accounts for about 2.63% of the fund's total assets, followed by Altria Group Inc (MO - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
Its top 10 holdings account for approximately 19.65% of DVY's total assets under management.
Performance and Risk
The ETF return is roughly 3.46% so far this year and was up about 6.83% in the last one year (as of 05/09/2022). In the past 52-week period, it has traded between $112.53 and $132.14.
The fund has a beta of 0.87 and standard deviation of 25.61% for the trailing three-year period, which makes DVY a medium risk choice in this particular space. With about 108 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 $54.16 billion in assets, Vanguard Value ETF has $98.96 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?
The iShares Select Dividend ETF (DVY - Free Report) was launched on 11/03/2003, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
DVY is managed by Blackrock, and this fund has amassed over $22.19 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the Dow Jones U.S. Select Dividend Index before fees and expenses.
The Dow Jones U.S. Select Dividend 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.38%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.96%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
DVY's heaviest allocation is in the Utilities sector, which is about 27.60% of the portfolio. Its Financials and Energy round out the top three.
When you look at individual holdings, Oneok Inc (OKE - Free Report) accounts for about 2.63% of the fund's total assets, followed by Altria Group Inc (MO - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
Its top 10 holdings account for approximately 19.65% of DVY's total assets under management.
Performance and Risk
The ETF return is roughly 3.46% so far this year and was up about 6.83% in the last one year (as of 05/09/2022). In the past 52-week period, it has traded between $112.53 and $132.14.
The fund has a beta of 0.87 and standard deviation of 25.61% for the trailing three-year period, which makes DVY a medium risk choice in this particular space. With about 108 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 $54.16 billion in assets, Vanguard Value ETF has $98.96 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.