Today we speak of recent outflows in a leading Large Cap Value Equity ETF, which falls within “Dividend/Yield” oriented equity ETFs, DVY (iShares Select Dividend, Expense Ratio 0.40%).
Approximately $500 million has flowed out of the fund this week on a surge in trading volume, but considering the total asset base of this fund exceeding $12.7 billion, this may simply be normal and expected profit taking.
DVY follows the criteria that screens for dividend per share growth rate, dividend payout percentage, and average daily dollar trading volume, isolates such names, and then chooses holdings based on dividend yield. Currently, top holdings in DVY are LO (3.68%), LMT (3.01%), CVX (2.14%), PM (2.02%), and ETR (1.98%) and the fund is the third largest “Equity/Dividend” offering in the marketplace in terms of assets under management.
VIG (Vanguard Dividend Appreciation, Expense Ratio 0.10%) is the largest currently, with $18.78 billion in assets under management, followed by SDY (SPDR S&P Dividend, Expense Ratio 0.35%) which has amassed $12.94 billion in AUM.
Clearly, this slice of the U.S. equity market has many fans, both retail and institutional, and has demonstrated the ability to raise impressive amounts of assets, across funds and across fund families. Investors have seen impressive gains across the board in U.S. Large Cap Value/Dividend names in 2013, particularly a strong surge in the past quarter, so some profit taking in DVY and related funds would not be surprising
especially given where we are on the calendar.
Industry sectors that have sizable weightings in such ETFs include Utilities, Consumer Staples, Industrials, and Financial Services typically, which makes conventional sense due to the propensity for names in such sectors to historically pay out dividends.