4 Value ETFs Your Broker Forgot to Mention (DEF, IDV, FVD)
Given that the SPDR S&P 500 (NYSE: SPY) is down 5.5% in the past month, plenty of ETFs have the look of value plays. There are also plenty of style funds that aim to be value propositions as well. Within the large-cap value ETF universe, few are as dominant or as popular as the Vanguard Value Trust (NYSE: VTV).
Simply put, VTV is big, cheap and offers exposure to over 400 stocks, most of which are readily identifiable blue chips. It's also not the only kid on the value ETF block. Here are a few large-cap value ETFs your broker probably neglected to mention.
PowerShares Dynamic Large Cap Value ETF (NYSE: PWV) The PowerShares Dynamic Large Cap Value ETF has been around for over seven years and in terms of headlines, the ETF has toiled in relative obscurity. However, investors have paid attention because PWV is home to almost $401 million in assets under management. Home to 50 stocks, PWV's constituency reads like a "usual suspects" of value funds. Eight of the fund's top-10 holdings are Dow stocks with Abbott Labs (NYSE: ABT) and Altria (NYSE: MO) the outliers.
A combined 36% allocation to staples and health care names speaks to PWV's value propensities and the fund has outperformed VTV year-to-date. If the broad market keeps falling, PWV will need to find support at $19 or risk significant damage. Be aware of the 0.6% expense ratio.
First Trust Value Line Dividend Index Fund (NYSE: FVD) Not just any old stock can make FVD's cut. Companies must have a market cap north of $1 billion and garner a Value Line safety ranking of one or two to be included. Like PWV, FVD has plenty of AUM, $440.5 million, but only draws occasional mentions from the so-called value experts. The 2.4% yield isn't jaw dropping, but FVD does a good job of mixing nearly 170 stocks together from the mid- and large-cap universes.
No single names receives an allocation of more than 0.68% and, predictably, utilities and staples combine for over 42% of the ETF's weight.
iShares Dow Jones International Select Dividend Index Fund (NYSE: IDV) The iShares Dow Jones International Select Dividend Index Fund has by no means anonymous, but these days it might be fair to say the $901.7 million fund is overlooked. It's easy to see why: "International" is part of this fund's name. As such, IDV has been outperformed by plenty of popular U.S. dividend funds this year, including the iShares High Dividend Equity Fund (NSYE: HDV).
A 20.5% allocation to financial aside, IDV's sector lineup, which is heavy on staples, telecom and utilities names, is conservative, the fund features no emerging markets exposure and its beta is barely higher than the S&P 500's. What all that indicates is IDV is being hampered by its Europe exposure. In particular, a 13% combined weight to France and Italy.
Guggenheim Defensive Equity ETF (NYSE: DEF) Not much about the Guggenheim Defensive Equity ETF will surprise investors because the fund's name gives away what its objectives are. Staples and utilities combine for over 45% of DEF's weigth and top-10 holdings include defensive names such as Wal-Mart (NYSE: WMT), PepsiCo (NYSE: PEP) and Verizon (NYSE: VZ).
To that end, DEF has disappointed in terms of recent performance, losing almost 3% in the past week alone. We suspect the culprit is an over 18% allocation to energy stocks, which in this case, is an allocation to MLPs. Still, DEF's energy exposure is being treated as though it's with traditional oil names. Sometimes the market doesn't do proper examinations before beating up an ETF and that's proving to be the case with DEF.
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