A smart beta exchange traded fund, the Deep Value ETF (DVP) debuted on 09/22/2014, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 Twm Funds. DVP has been able to amass assets over $249.82 M, making it one of the average sized ETFs in the Style Box - Large Cap Value. This particular fund 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.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the most expensive products in the space, this ETF has annual operating expenses of 0.80%.
It has a 12-month trailing dividend yield of 2.77%.
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.
For DVP, it has heaviest allocation in the Consumer Discretionary sector --about 37.50% of the portfolio --while Telecom and Information Technology round out the top three.
Looking at individual holdings, Viacom Inc New (VIAB) accounts for about 9.03% of total assets, followed by Gap Inc (GPS) and Cvs Health Corp (CVS).
DVP's top 10 holdings account for about 59.18% of its total assets under management.
Performance and Risk
The ETF has lost about -2.05% and is down about -17.47% so far this year and in the past one year (as of 06/10/2019), respectively. DVP has traded between $28.49 and $37.21 during this last 52-week period.
The fund has a beta of 1.12 and standard deviation of 17.41% for the trailing three-year period, which makes DVP a high risk choice in this particular 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 $38 B in assets, Vanguard Value ETF has $47.67 B. IWD has an expense ratio of 0.20% 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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Deep Value ETF (DVP): ETF Research Reports
Viacom Inc. (VIAB) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
The Gap, Inc. (GPS) : Free Stock Analysis Report
CVS Health Corporation (CVS) : Free Stock Analysis Report
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