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Is Invesco Dow Jones Industrial Average Dividend ETF (DJD) a Strong ETF Right Now?
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Making its debut on 12/16/2015, smart beta exchange traded fund Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend 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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $321.15 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Blend. DJD is managed by Invesco. Before fees and expenses, DJD seeks to match the performance of the Dow Jones Industrial Average Yield Weighted index.
The Dow Jones Industrial Average Yield Weighted Index provides exposure to high-yielding equity securities in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.07% for DJD, making it one of the least expensive products in the space.
DJD's 12-month trailing dividend yield is 3.49%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector - about 18.90% of the portfolio. Financials and Healthcare round out the top three.
Taking into account individual holdings, Walgreens Boots Alliance Inc (WBA - Free Report) accounts for about 10.26% of the fund's total assets, followed by Verizon Communications Inc (VZ - Free Report) and Dow Inc (DOW - Free Report) .
Its top 10 holdings account for approximately 59.76% of DJD's total assets under management.
Performance and Risk
The ETF has lost about -0.02% and is up roughly 8.79% so far this year and in the past one year (as of 01/04/2024), respectively. DJD has traded between $39.87 and $46.43 during this last 52-week period.
DJD has a beta of 0.83 and standard deviation of 14.32% for the trailing three-year period. With about 29 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dow Jones Industrial Average Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $394.31 billion in assets, SPDR S&P 500 ETF has $490.37 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 Blend.
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 Invesco Dow Jones Industrial Average Dividend ETF (DJD) a Strong ETF Right Now?
Making its debut on 12/16/2015, smart beta exchange traded fund Invesco Dow Jones Industrial Average Dividend ETF (DJD - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend 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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $321.15 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Blend. DJD is managed by Invesco. Before fees and expenses, DJD seeks to match the performance of the Dow Jones Industrial Average Yield Weighted index.
The Dow Jones Industrial Average Yield Weighted Index provides exposure to high-yielding equity securities in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.07% for DJD, making it one of the least expensive products in the space.
DJD's 12-month trailing dividend yield is 3.49%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector - about 18.90% of the portfolio. Financials and Healthcare round out the top three.
Taking into account individual holdings, Walgreens Boots Alliance Inc (WBA - Free Report) accounts for about 10.26% of the fund's total assets, followed by Verizon Communications Inc (VZ - Free Report) and Dow Inc (DOW - Free Report) .
Its top 10 holdings account for approximately 59.76% of DJD's total assets under management.
Performance and Risk
The ETF has lost about -0.02% and is up roughly 8.79% so far this year and in the past one year (as of 01/04/2024), respectively. DJD has traded between $39.87 and $46.43 during this last 52-week period.
DJD has a beta of 0.83 and standard deviation of 14.32% for the trailing three-year period. With about 29 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dow Jones Industrial Average Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $394.31 billion in assets, SPDR S&P 500 ETF has $490.37 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 Blend.
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.