Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Deep Value ETF (DVP - Free Report) is a passively managed exchange traded fund launched on 09/22/2014.
The fund is sponsored by Deep Value Etf. It has amassed assets over $319.35 M, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
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.
Annual operating expenses for this ETF are 0.59%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 2.57%.
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.
Looking at individual holdings, Cardinal Health Inc (CAH - Free Report) accounts for about 8.24% of total assets, followed by Dxc Technology Co (DXC - Free Report) and Franklin Res Inc (BEN - Free Report) .
The top 10 holdings account for about 58.46% of total assets under management.
Performance and Risk
DVP 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.
The ETF has added about 12.80% so far this year and is up roughly 13.28% in the last one year (as of 12/27/2019). In the past 52-week period, it has traded between $27.93 and $34.02.
The ETF has a beta of 1.19 and standard deviation of 17.89% for the trailing three-year period, making it a high risk choice in the space. With about 21 holdings, it has more concentrated exposure than peers.
Deep Value ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, DVP is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $42.60 B in assets, Vanguard Value ETF has $55.67 B. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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.