If you’re interested in broad exposure to the Large Cap Blend segment of the US equity market, look no further than the Invesco Dow Jones Industrial Average Dividend ETF (DJD), a passively managed exchange traded fund launched on 12/16/2015.
The fund is sponsored by Invesco. It has amassed assets over $295.19 million, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.52%.
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 Financials sector–about 17.60% of the portfolio. Consumer Staples and Healthcare round out the top three.
Looking at individual holdings, Verizon Communications Inc (VZ) accounts for about 10.22% of total assets, followed by 3m Co (MMM) and Dow Inc (DOW).
The top 10 holdings account for about 60.95% of total assets under management.
Performance and Risk
DJD seeks to match the performance of the Dow Jones Industrial Average Yield Weighted index before fees and expenses. The Dow Jones Industrial Average Yield Weighted Index provides exposure to high-yielding equity securities in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months.
The ETF has added roughly 2.90% so far this year and is up about 12.17% in the last one year (as of 04/25/2024). In the past 52-week period, it has traded between $39.87 and $48.08.
The ETF has a beta of 0.83 and standard deviation of 13.89% for the trailing three-year period. With about 29 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dow Jones Industrial Average Dividend 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, DJD is a good option for those seeking exposure to the Style Box – Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $437.51 billion in assets, SPDR S&P 500 ETF has $510.33 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Bottom-Line
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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Invesco Dow Jones Industrial Average Dividend ETF (DJD): ETF Research Reports
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
3M Company (MMM) : Free Stock Analysis Report
Dow Inc. (DOW) : Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports