Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the Deep Value ETF , a passively managed exchange traded fund launched on 09/22/2014.
The fund is sponsored by Twm Funds. It has amassed assets over $260.05 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. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their 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.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 4.17%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Consumer Discretionary sector--about 23.30% of the portfolio. Materials and Healthcare round out the top three.
Looking at individual holdings, Cardinal Health Inc (CAH) accounts for about 9.78% of total assets, followed by Macys Inc (M) and Dxc Technology Co (
DXC Quick Quote DXC - Free Report) .
The top 10 holdings account for about 62.18% 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 lost about -16.20% so far this year and is down about -13.79% in the last one year (as of 03/04/2020). In the past 52-week period, it has traded between $27.36 and $34.02.
The ETF has a beta of 1.19 and standard deviation of 18.67% 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 sufficient 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 Quick Quote IWD - Free Report) and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $37.09 B in assets, Vanguard Value ETF has $50.04 B. IWD has an expense ratio of 0.19% and VTV charges 0.04%. Bottom-Line
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.