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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) made its debut on 11/03/2003, 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
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.
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 $19.22 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the Dow Jones U.S. Select Dividend Index.
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
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 0.38% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.70%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 26.50% of the portfolio, the fund has heaviest allocation to the Utilities sector; Financials and Consumer Staples round out the top three.
When you look at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.48% of the fund's total assets, followed by Verizon Communications Inc (VZ - Free Report) and International Business Machines Co (IBM - Free Report) .
The top 10 holdings account for about 17.7% of total assets under management.
Performance and Risk
The ETF has lost about -4.19% so far this year and is down about -4.03% in the last one year (as of 08/30/2023). In the past 52-week period, it has traded between $107.22 and $126.38.
The fund has a beta of 0.88 and standard deviation of 17.61% for the trailing three-year period, which makes DVY a medium risk choice in this particular space. With about 105 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 $50.85 billion in assets, Vanguard Value ETF has $101.65 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) made its debut on 11/03/2003, 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
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.
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 $19.22 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the Dow Jones U.S. Select Dividend Index.
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
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 0.38% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.70%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 26.50% of the portfolio, the fund has heaviest allocation to the Utilities sector; Financials and Consumer Staples round out the top three.
When you look at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.48% of the fund's total assets, followed by Verizon Communications Inc (VZ - Free Report) and International Business Machines Co (IBM - Free Report) .
The top 10 holdings account for about 17.7% of total assets under management.
Performance and Risk
The ETF has lost about -4.19% so far this year and is down about -4.03% in the last one year (as of 08/30/2023). In the past 52-week period, it has traded between $107.22 and $126.38.
The fund has a beta of 0.88 and standard deviation of 17.61% for the trailing three-year period, which makes DVY a medium risk choice in this particular space. With about 105 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 $50.85 billion in assets, Vanguard Value ETF has $101.65 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.