Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the iShares Select Dividend ETF (
DVY Quick Quote DVY - Free Report) is a passively managed exchange traded fund launched on 11/03/2003.
The fund is sponsored by Blackrock. It has amassed assets over $22.73 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.38%, putting 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 to the Utilities sector--about 25.80% of the portfolio. Financials and Consumer Staples round out the top three.
Looking at individual holdings, Altria Group Inc (
MO Quick Quote MO - Free Report) accounts for about 2.11% of total assets, followed by Valero Energy Corp ( VLO Quick Quote VLO - Free Report) and International Business Machines Co ( IBM Quick Quote IBM - Free Report) .
The top 10 holdings account for about 13.28% of total assets under management.
Performance and Risk
DVY 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.
The ETF has gained about 2.50% so far this year and it's up approximately 7.73% in the last one year (as of 11/29/2022). In the past 52-week period, it has traded between $107.22 and $132.14.
The ETF has a beta of 0.88 and standard deviation of 26.67% for the trailing three-year period, making it a medium risk choice in the space. With about 105 holdings, it effectively diversifies company-specific risk.
IShares Select Dividend ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, DVY is an outstanding option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Value ETF (
IWD Quick Quote IWD - Free Report) and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $54.46 billion in assets, Vanguard Value ETF has $105.84 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%. Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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.