Launched on 09/22/2014, the Deep Value ETF (DVP) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Deep Value Etf. DVP has been able to amass assets over $271.06 M, making it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, DVP seeks to match the performance of the TWM Deep Value Index.
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.
Cost & Other Expenses
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.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.80%.
It's 12-month trailing dividend yield comes in at 2.83%.
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 in the Consumer Discretionary sector - about 31.60% of the portfolio. Telecom and Information Technology round out the top three.
Looking at individual holdings, Viacom Inc New (VIAB) accounts for about 8.61% of total assets, followed by Western Digital Corp (WDC) and Cvs Health Corp (CVS).
The top 10 holdings account for about 58.77% of total assets under management.
Performance and Risk
Year-to-date, the Deep Value ETF has lost about -2.35% so far, and is down about -16.87% over the last 12 months (as of 08/15/2019). DVP has traded between $28.49 and $36.30 in this past 52-week period.
DVP has a beta of 1.15 and standard deviation of 17.21% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 21 holdings, it has more concentrated exposure than peers.
Deep Value 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) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $36.91 B in assets, Vanguard Value ETF has $46.85 B. 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.
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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Western Digital Corporation (WDC) : Free Stock Analysis Report
Viacom Inc. (VIAB) : Free Stock Analysis Report
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