ETF Chart of the Day: Large-Cap Value

November 16th at 10:47am by Paul Weisbruch, Street One Financial

We spoke recently about what seems like a migration out of small-cap equities and back into large-cap equities from a fund flows standpoint via creation/redemption activity that we have observed in exchange traded funds. [Investors Shift to Large-Cap ETFs]

Often, investors are faced with a decision between “growth” or “value” segments of the market, and in 2011, amidst global volatility, investors in a number of value equity ETFs have been rewarded not only with promising returns, but also
attractive dividend yields.

Today, we examine a handful of top performing products in the U.S. large-cap equity category.

The top 5 performing funds in the group are DOD (Elements DJ High Yield Select 10 Total Return ETN), DEF (Guggenheim Defensive Equity), FDL (First Trust Morningstar Dividend Leaders), DHS (WisdomTree Equity Income) and DTN (WisdomTree Dividend ex-Financials).

With the S&P 500 up 0.26% year to date and the S&P 500 Value Index down 3.73%, these five funds have displayed noteworthy performance thus far in 2011.

DOD is up 8.90% year to date and is designed as a subset of the Dow Jones Industrial Average, utilizing the ten stocks with the highest indicated annual dividend yield of the 30 names in the index and reshuffling this lineup annually.

DEF has rallied 7.91% year to date and tracks the Sabrient Defensive Equity Index which attempts to own securities that have low relative valuations, conservative accounting, steady distribution of dividends, as well as historical track records of displaying out-performance to the general market in bear market periods.

FDL follows the Morningstar Dividend Leaders Index which is screened to include equities that have displayed consistency in their payment of dividends over time. After securities are deemed eligible for inclusion in the index, the top 100 equities are chosen and then ranked based on their respective dividend yields.

DHS is based on the WisdomTree Equity Income index which includes equities from another WisdomTree index, the Dividend Index. Equities that meet the minimum $200 million market capitalization and $200,000 average daily trading volume for the prior three months are then taken from the Dividend Index and ranked by their respective dividend yields in order to formulate the ETF’s weightings.

Finally, DTN grants exposure to the WisdomTree Dividend ex-Financials index which owns large and mid-cap equities that are in sectors outside of Financials, and yield attractive dividends. Like DHS, these equities must meet minimum screening criteria in order to be a part of the ETF.

Guggenheim Defensive Equity

For more information on Street One ETF research and ETF trade execution/liquidity services, contact pweisbruch@streetonefinancial.com.