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Is iShares Select Dividend ETF (DVY) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the iShares Select Dividend ETF (DVY - Free Report) is a smart beta exchange traded fund launched on 11/03/2003.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $18.89 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.38% for DVY, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.60%.
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 29.30% 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 3.05% 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 19.14% of total assets under management.
Performance and Risk
The ETF has added about 10.22% and was up about 14.19% so far this year and in the past one year (as of 08/14/2024), respectively. DVY has traded between $102.97 and $130.12 during this last 52-week period.
DVY has a beta of 0.87 and standard deviation of 15.73% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 104 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $57.33 billion in assets, Vanguard Value ETF has $119.20 billion. SCHD has an expense ratio of 0.06% 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?
Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the iShares Select Dividend ETF (DVY - Free Report) is a smart beta exchange traded fund launched on 11/03/2003.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $18.89 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.38% for DVY, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.60%.
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 29.30% 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 3.05% 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 19.14% of total assets under management.
Performance and Risk
The ETF has added about 10.22% and was up about 14.19% so far this year and in the past one year (as of 08/14/2024), respectively. DVY has traded between $102.97 and $130.12 during this last 52-week period.
DVY has a beta of 0.87 and standard deviation of 15.73% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 104 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $57.33 billion in assets, Vanguard Value ETF has $119.20 billion. SCHD has an expense ratio of 0.06% 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.