If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the Deep Value ETF (DVP - Free Report) , a passively managed exchange traded fund launched on 09/22/2014.
The fund is sponsored by Deep Value Etf. It has amassed assets over $312.96 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
Large cap companies 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.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
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 3.48%.
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.
This ETF has heaviest allocation to the Consumer Discretionary sector--about 23.70% of the portfolio. Materials and Healthcare round out the top three.
Looking at individual holdings, Cardinal Health Inc (CAH - Free Report) accounts for about 8.08% of total assets, followed by Dxc Technology Co (DXC - Free Report) and Macys Inc (M - Free Report) .
The top 10 holdings account for about 61.03% 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 gained about 0.36% so far this year and it's up approximately 9.88% in the last one year (as of 01/20/2020). 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 17.84% 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 reasonable 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 $42.44 B in assets, Vanguard Value ETF has $56.53 B. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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.