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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.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

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.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

Managed by Blackrock, DVY has amassed assets over $18 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund 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

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.38%.

It's 12-month trailing dividend yield comes in at 3.91%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 27.30% 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 2.58% of the fund's total assets, followed by Oneok Inc (OKE - Free Report) and International Business Machines Co (IBM - Free Report) .

Its top 10 holdings account for approximately 18.5% of DVY's total assets under management.

Performance and Risk

The ETF has lost about -5.53% so far this year and is down about -6.63% in the last one year (as of 11/29/2023). In the past 52-week period, it has traded between $102.97 and $126.38.

DVY has a beta of 0.89 and standard deviation of 16.37% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 105 holdings, it effectively diversifies company-specific risk.


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 $50.62 billion in assets, Vanguard Value ETF has $99.91 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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