DVP’s timing appears good as the ETF has come to market during a year in which investors have allocated billions to value ETFs. For example, the Vanguard Value ETF (NYSEArca: VTV) and the iShares S&P 500 Value ETF (NYSEArca: IVE) have added $2.4 billion and $1.2 billion in new assets, respectively. The Schwab U.S. Large-Cap Value ETF (NYSEArca: SCHV) has tacked on nearly $300 million in new assets. http://www.etftrends.com/2014/05/dont-forget-these-value-etfs/
DVP’s underlying index “is comprised of 20 undervalued dividend paying stocks within the S&P 500 Index with solid balance sheets, earnings and strong free cash flow. The companies within the Index are weighted based on a rules-based assessment of their valuations so that stocks that are most attractively valued receive a higher weight,” according to TWM Funds.
The emphasis on value is apparent as DVP sports a P/E ratio of 13.7 compared to about 17 for the S&P 500. Holdings include Frontier Communications (NasdaqGS: FTR), Dow component Verizon (NYSE: VZ), Computer Sciences (NYSE: CSC) and Hewlett-Packard (NYSE: HPQ).
The consumer discretionary, telecom and technology sectors combine for over two-thirds of the new ETF’s weight.
“With U.S. corporate balance sheet strength at its highest level in over 30 years, CEOs are increasingly under pressure to maximize shareholder value. The TWM Deep Value Index was developed to provide exposure to undervalued, dividend paying stocks where value creation is expected to come from improving fundamentals, investor activism, or merger and acquisition activity,” said Paul Buongiorno, Managing Director and Chief Investment Strategist at Tiedemann Wealth Management, in the statement.