Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Deep Value ETF (DVP) 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 $309.71 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 usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value 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 0.80%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 2.65%.
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.
This ETF has heaviest allocation to the Consumer Discretionary sector--about 22.40% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Cardinal Health Inc (CAH) accounts for about 8.27% of total assets, followed by Dxc Technology Co (DXC) and Macys Inc (M).
The top 10 holdings account for about 58.97% 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 roughly 9.44% so far this year and is down about -0.74% in the last one year (as of 12/05/2019). 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 17.99% 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) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $41.22 B in assets, Vanguard Value ETF has $53.26 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.
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Deep Value ETF (DVP): ETF Research Reports
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
Macy's, Inc. (M) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
DXC Technology Company. (DXC) : Free Stock Analysis Report
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