Launched on 09/22/2014, the Deep Value ETF (DVP - 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 long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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
Because the fund has amassed over $262.31 M, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. DVP is managed by Twm Funds. This particular fund seeks to match the performance of the TWM Deep Value Index before fees and expenses.
TWM Deep Value Index is constructed using an objective, rules-based methodology that begins with an initial universe that mirrors the companies listed on the S&P 500 Index.
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 one of the most expensive products in the space, this ETF has annual operating expenses of 0.80%.
It has a 12-month trailing dividend yield of 2.64%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For DVP, it has heaviest allocation in the Consumer Discretionary sector --about 40.30% of the portfolio --while Telecom and Information Technology round out the top three.
Taking into account individual holdings, Viacom Inc New (VIAB - Free Report) accounts for about 8.19% of the fund's total assets, followed by Gap Inc (GPS - Free Report) and Western Digital Corp (WDC - Free Report) .
Its top 10 holdings account for approximately 59.17% of DVP's total assets under management.
Performance and Risk
Year-to-date, the Deep Value ETF has gained about 2.84% so far, and is down about -8.16% over the last 12 months (as of 05/17/2019). DVP has traded between $28.82 and $37.21 in this past 52-week period.
DVP has a beta of 1.05 and standard deviation of 17.39% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 21 holdings, it has more concentrated exposure than peers.
Deep Value 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 $38.05 B in assets, Vanguard Value ETF has $47.13 B. IWD has an expense ratio of 0.20% 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.
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.