LLaunched on 12/16/2015, the Invesco Dow Jones Industrial Average Dividend (DJD) ETF is a passively managed exchange-traded fund designed to provide broad exposure to the Large Cap Blend segment of the US stock market.
The fund is sponsored by Invesco. It has amassed assets of over $230.58 million, making it one of the mid-sized ETFs attempting to match the Large Cap Blend segment of the US stock market.
Why the Large Cap Mix
Large-cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large-cap companies show more predictable cash flows and are less volatile than their mid- and small-cap counterparts.
Mixed ETFs typically hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
The annual operating expense of this ETF is 0.07%, making it one of the cheapest products on the market.
It has a 12-month dividend yield of 3.17%.
Sector exposure and main holdings
It is important to delve into an ETF’s holdings before investing despite the many advantages of these types of funds such as diversified exposure, which minimizes the risk of a single stock. And most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has the highest allocation to the healthcare sector – around 18.90% of the portfolio. Consumer staples and information technology round out the top three.
In terms of individual holdings, International Business Machines Corp (IBM) accounts for approximately 8.94% of total assets, followed by Verizon Communications Inc (VZ) and Merck & Co Inc (MRK).
The top 10 holdings represent approximately 57.53% of total assets under management.
Performance and risks
DJD seeks to match the performance of the Dow Jones Industrial Average Yield Weighted Index before fees and expenses. The Dow Jones Industrial Average Yield Weighted Index provides exposure to high yield equity securities of the Dow Jones Industrial Average based on their 12-month dividend yield over the previous 12 months.
The ETF has lost around -5.08% so far this year and is down around -0.51% over the past year (as of 7/28/2022). Over the past 52-week period, it traded between $41.62 and $47.60.
The ETF has a beta of 0.81 and a standard deviation of 23.09% for the three-year period. With around 28 holdings, it has more concentrated exposure than its peers.
Invesco Dow Jones Industrial Average Dividend ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, DJD is a good option for those seeking exposure to the Style Box – Large Cap Blend area of the market. Investors could also consider other ETF options in the space.
The iShares Core S&P 500 ETF (IVV) and SPDR S&P 500 ETF (SPY) follow a similar index. While the iShares Core S&P 500 ETF has $297.42 billion in assets, the SPDR S&P 500 ETF has $365.17 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Although they are an excellent vehicle for long-term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility and tax efficiency.
To learn more about this product and other ETFs, find products that fit your investment goals, and read articles about the latest developments in the ETF investment universe, please visit Zacks ETF Center.
Want key ETF information delivered straight to your inbox?
Zacks’ free fund newsletter will update you weekly on top news and analysis, as well as the top performing ETFs.
Get it for free >>
Click to get this free report
Invesco Dow Jones Industrial Average Dividend ETF (DJD): ETF Research Reports
International Business Machines Corporation (IBM): Free Inventory Analysis Report
Verizon Communications Inc. (VZ): Free Stock Analysis Report
Merck & Co., Inc. (MRK): Free Inventory Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
To read this article on Zacks.com, click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.