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Is iShares Select Dividend ETF (DVY) a Strong ETF Right Now?
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The iShares Select Dividend ETF (DVY - Free Report) was launched on 11/03/2003, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $18.47 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. DVY, before fees and expenses, 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.38%, making it on par with most peer products in the space.
DVY's 12-month trailing dividend yield is 3.63%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
DVY's heaviest allocation is in the Utilities sector, which is about 28.50% of the portfolio. Its Financials and Consumer Staples round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.94% of total assets, followed by At&t Inc (T - Free Report) and Verizon Communications Inc (VZ - Free Report) .
The top 10 holdings account for about 18.21% of total assets under management.
Performance and Risk
The ETF return is roughly 5.99% so far this year and was up about 14.46% in the last one year (as of 06/05/2024). In the past 52-week period, it has traded between $102.97 and $125.75.
The fund has a beta of 0.88 and standard deviation of 15.88% for the trailing three-year period, which makes DVY a medium risk choice in this particular space. With about 107 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.
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 $55.09 billion in assets, Vanguard Value ETF has $114.64 billion. IWD has an expense ratio of 0.19% 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?
The iShares Select Dividend ETF (DVY - Free Report) was launched on 11/03/2003, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Blackrock, and has been able to amass over $18.47 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Value. DVY, before fees and expenses, 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.38%, making it on par with most peer products in the space.
DVY's 12-month trailing dividend yield is 3.63%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
DVY's heaviest allocation is in the Utilities sector, which is about 28.50% of the portfolio. Its Financials and Consumer Staples round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.94% of total assets, followed by At&t Inc (T - Free Report) and Verizon Communications Inc (VZ - Free Report) .
The top 10 holdings account for about 18.21% of total assets under management.
Performance and Risk
The ETF return is roughly 5.99% so far this year and was up about 14.46% in the last one year (as of 06/05/2024). In the past 52-week period, it has traded between $102.97 and $125.75.
The fund has a beta of 0.88 and standard deviation of 15.88% for the trailing three-year period, which makes DVY a medium risk choice in this particular space. With about 107 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.
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 $55.09 billion in assets, Vanguard Value ETF has $114.64 billion. IWD has an expense ratio of 0.19% 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.