The utilities sector weighed on the S&P 500 this year after a great 2011. Utilities Select Sector SPDR (NYSEArca: XLU) is up only 0.7% year to date. [Utilities ETFs Turn Negative on Tax Worries]
In general, dividend ETFs overweight the more defensive and stable areas of the market, so they might lag in strong rallies. They can also underweight cyclical sectors. DVY has 10.1% in the financial sector while the S&P 500 fund allocates 14.4%. Financial Select Sector SPDR (NYSEArca: XLF) trounced the S&P 500 with a 27.8% gain so far this year.
Performance of U.S. dividend ETFs in 2012
- S&P 500: 15.3%
- Vanguard Dividend Appreciation ETF (NYSEArca: VIG): 11.4%
- Vanguard High Dividend Yield (NYSEArca: VYM): 12.3%
- iShares Dow Jones Select Dividend Index (NYSEArca: DVY): 12%
- iShares High Dividend Equity Fund (NYSEArca: HDV): 9.6%
- SPDR S&P Dividend ETF (NYSEArca: SDY): 11.1%
- Schwab U.S. Dividend Equity ETF (SCHD): 11.2%
- WisdomTree LargeCap Dividend Fund (NYSEArca: DLN): 11.9%
- PowerShares Dividend Achievers Portfolio (NYSEArca: PFM): 9.5%
- First Trust Value Line Dividend Index (NYSEArca: FVD): 10.7%
Morningstar year-to-date data as of Dec. 27.
Full disclosure: Tom Lydon’s clients own DVY and SPY.