The iShares Core Dividend Growth ETF (
DGRO Quick Quote DGRO - Free Report) made its debut on 06/10/2014, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market. What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
DGRO is managed by Blackrock, and this fund has amassed over $22.95 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 Morningstar US Dividend Growth Index before fees and expenses.
The Morningstar US Dividend Growth Index is composed of U.S. equities with a history of consistently growing dividends.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.08% for DGRO, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.16%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
DGRO's heaviest allocation is in the Financials sector, which is about 20.50% of the portfolio. Its Information Technology and Healthcare round out the top three.
Taking into account individual holdings, Microsoft Corp (
MSFT Quick Quote MSFT - Free Report) accounts for about 3.08% of the fund's total assets, followed by Johnson & Johnson ( JNJ Quick Quote JNJ - Free Report) and Apple Inc ( AAPL Quick Quote AAPL - Free Report) .
The top 10 holdings account for about 25.16% of total assets under management.
Performance and Risk
So far this year, DGRO has lost about -12.14%, and is down about -5% in the last one year (as of 09/16/2022). During this past 52-week period, the fund has traded between $45.84 and $56.06.
The ETF has a beta of 0.90 and standard deviation of 23.72% for the trailing three-year period, making it a medium risk choice in the space. With about 418 holdings, it effectively diversifies company-specific risk.
IShares Core Dividend Growth ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
ProShares S&P 500 Dividend Aristocrats ETF (
NOBL Quick Quote NOBL - Free Report) tracks S&P 500 DividendAristocrats Index and the Vanguard Dividend Appreciation ETF ( VIG Quick Quote VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. ProShares S&P 500 Dividend Aristocrats ETF has $9.93 billion in assets, Vanguard Dividend Appreciation ETF has $60.95 billion. NOBL has an expense ratio of 0.35% and VIG charges 0.06%.
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.
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.