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Is iShares Select Dividend ETF (DVY) a Strong ETF Right Now?
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Making its debut on 11/03/2003, smart beta exchange traded fund iShares Select Dividend ETF (DVY - Free Report) provides investors 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.
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.
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.
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 $18.30 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Value. DVY is managed by Blackrock. Before fees and expenses, DVY 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.38% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.86%.
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.
This ETF has heaviest allocation in the Utilities sector - about 25.60% of the portfolio. Financials and Consumer Staples round out the top three.
Taking into account individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.34% of the fund's total assets, followed by Verizon Communications Inc (VZ - Free Report) and International Business Machines Co (IBM - Free Report) .
Its top 10 holdings account for approximately 18.74% of DVY's total assets under management.
Performance and Risk
So far this year, DVY has lost about -1.11%, and is down about -4.52% in the last one year (as of 02/02/2024). During this past 52-week period, the fund has traded between $102.97 and $126.
The ETF has a beta of 0.89 and standard deviation of 16.18% 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.
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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $52.75 billion in assets, Vanguard Value ETF has $108.10 billion. SCHD has an expense ratio of 0.06% 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?
Making its debut on 11/03/2003, smart beta exchange traded fund iShares Select Dividend ETF (DVY - Free Report) provides investors 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.
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.
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.
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 $18.30 billion, this makes it one of the largest ETFs in the Style Box - Large Cap Value. DVY is managed by Blackrock. Before fees and expenses, DVY 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.38% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.86%.
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.
This ETF has heaviest allocation in the Utilities sector - about 25.60% of the portfolio. Financials and Consumer Staples round out the top three.
Taking into account individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.34% of the fund's total assets, followed by Verizon Communications Inc (VZ - Free Report) and International Business Machines Co (IBM - Free Report) .
Its top 10 holdings account for approximately 18.74% of DVY's total assets under management.
Performance and Risk
So far this year, DVY has lost about -1.11%, and is down about -4.52% in the last one year (as of 02/02/2024). During this past 52-week period, the fund has traded between $102.97 and $126.
The ETF has a beta of 0.89 and standard deviation of 16.18% 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.
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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $52.75 billion in assets, Vanguard Value ETF has $108.10 billion. SCHD has an expense ratio of 0.06% 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.