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Making its debut on 12/16/2015, smart beta exchange traded fund Invesco Dow Jones Industrial Average Dividend ETF (DJD) provides investors broad exposure to the Style Box - Large Cap Blend category of the market.
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Managed by Invesco, DJD has amassed assets over $343.65 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. DJD, before fees and expenses, seeks to match the performance of the Dow Jones Industrial Average Yield Weighted index.
The Dow Jones Industrial Average Yield Weighted Index provides exposure to high-yielding equity securities in the Dow Jones Industrial Average by their 12-month dividend yield over the prior 12 months.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.07%.
DJD's 12-month trailing dividend yield is 2.08%.
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
DJD's heaviest allocation is in the Healthcare sector, which is about 16.60% of the portfolio. Its Financials and Information Technology round out the top three.
Taking into account individual holdings, Verizon Communications Inc (VZ) accounts for about 11.88% of the fund's total assets, followed by Chevron Corp (CVX) and Merck & Co Inc (MRK).
The top 10 holdings account for about 59.43% of total assets under management.
The ETF has added about 3.23% so far this year and is up roughly 9.03% in the last one year (as of 05/19/2025). In the past 52-week period, it has traded between $46.81 and $54.48.
DJD has a beta of 0.78 and standard deviation of 14.22% for the trailing three-year period. With about 30 holdings, it has more concentrated exposure than peers.
Invesco Dow Jones Industrial Average Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
SPDR S&P 500 ETF (SPY) tracks S&P 500 Index and the Vanguard S&P 500 ETF (VOO) tracks S&P 500 Index. SPDR S&P 500 ETF has $611.14 billion in assets, Vanguard S&P 500 ETF has $649.89 billion. SPY has an expense ratio of 0.09% and VOO charges 0.03%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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This article originally published on Zacks Investment Research (zacks.com).
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