After another year of rapid growth, the U.S. ETF industry is evolving into price-based segments, each with distinct product offerings and market leaders. Net inflows into U.S. listed ETFs year-to-date in 2025 have already exceeded 2024’s annual inflow record of $1.2 trillion and are going into different price categories. Most assets in the low-cost (0%-0.25% net expense ratio) segment are currently in traditional beta ETFs (see Figure 1), while the medium- (0.26%-0.75%) and high-cost (>0.75%) segments are n ...

Core Viewpoint - The iShares Select Dividend ETF (DVY) is a large-cap value ETF that aims to provide broad exposure to the U.S. equity market, with significant assets under management and a focus on dividend-paying stocks [1][7]. Group 1: Fund Overview - Launched on November 3, 2003, DVY is designed to match the Large Cap Value segment of the U.S. equity market and is sponsored by Blackrock [1]. - The fund has amassed over $20.75 billion in assets, making it one of the largest ETFs in its category [1]. Group 2: Investment Characteristics - Large-cap companies typically have market capitalizations above $10 billion and are characterized by stability and predictable cash flows [2]. - Value stocks, which DVY focuses on, generally have lower price-to-earnings and price-to-book ratios, and while they have lower sales and earnings growth rates, they have historically outperformed growth stocks in most markets [3]. Group 3: Costs and Performance - The annual operating expenses for DVY are 0.38%, which is competitive within its peer group, and it has a 12-month trailing dividend yield of 3.63% [4]. - As of September 2, 2025, DVY has gained approximately 9.79% year-to-date and 9.65% over the past year, with a trading range of $118.37 to $143.41 in the last 52 weeks [8]. Group 4: Sector Exposure and Holdings - DVY has a significant allocation to the Financials sector, comprising about 26.5% of the portfolio, followed by Utilities and Consumer Staples [5]. - The top 10 holdings account for approximately 19.18% of total assets, with Altria Group Inc, Ford Motor Co, and Verizon Communications Inc being notable individual holdings [6]. Group 5: Alternatives and Market Position - DVY carries a Zacks ETF Rank of 3 (Hold), indicating a reasonable option for investors seeking exposure to the Large Cap Value area [9]. - Other comparable ETFs include Schwab U.S. Dividend Equity ETF (SCHD) and Vanguard Value ETF (VTV), which have larger asset bases and lower expense ratios [10]. Group 6: Conclusion - Passively managed ETFs like DVY are favored by both institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency [11].

Core Insights - The iShares Select Dividend ETF (DVY) is a smart beta ETF that provides broad exposure to the Large Cap Value category, managed by Blackrock with over $20.7 billion in assets [1][5]. Fund Overview - DVY aims to match the performance of the Dow Jones U.S. Select Dividend Index, which includes companies with consistently high dividend yields [5]. - The ETF has an annual operating expense ratio of 0.38% and a 12-month trailing dividend yield of 3.65% [6]. Sector Exposure and Holdings - The Financials sector constitutes approximately 26.1% of DVY's portfolio, followed by Utilities and Consumer Staples [7]. - Altria Group Inc accounts for about 2.46% of the fund's total assets, with the top 10 holdings making up around 18.88% of total assets [8]. Performance Metrics - As of August 26, 2025, DVY has gained about 9.28% year-to-date and approximately 10.64% over the past year, with a trading range between $118.37 and $143.41 in the last 52 weeks [10]. - The fund has a beta of 0.76 and a standard deviation of 15.69% over the trailing three-year period, indicating medium risk [10]. Alternatives - Other ETFs in the Large Cap Value space include Schwab U.S. Dividend Equity ETF (SCHD) and Vanguard Value ETF (VTV), with SCHD having $72.08 billion in assets and an expense ratio of 0.06%, while VTV has $143.1 billion and an expense ratio of 0.04% [12].

Economic Growth - The U.S. economy rebounded strongly in Q2 2025 with GDP growing at an annualized rate of 3%, surpassing the forecast of 2.6% by Bloomberg economists [1] - This rebound followed a contraction of 0.5% in Q1, primarily due to a surge in imports ahead of tariff measures, which negatively impacted GDP calculations [2] Underlying Economic Indicators - Sales to private domestic purchasers increased by only 1.2% in Q2, down from 1.9% in Q1, indicating the weakest growth pace since 2022 [3] - The Q2 data reflects the first full quarter under President Trump's expanded tariff policy, with ongoing monitoring of its impact on growth [4] Market Reactions - Initial fears of a recession due to tariff announcements have eased as stronger-than-expected data emerged, with the probability of a U.S. recession in 2025 dropping to 17% from a peak of 66% [5] Federal Reserve Actions - The Federal Reserve maintained interest rates at 4.25% to 4.5% for the fifth consecutive meeting, reflecting internal divisions regarding the impact of tariffs [6] Investment Opportunities - The current economic conditions and the Fed's rate-hold stance create opportunities for value ETF investing, as a decent growth rate supports corporate earnings [7] - Investors are likely to rotate from high-growth stocks to undervalued, lower-risk companies as signs of economic cooling emerge [8] Value Stocks Performance - Value stocks, particularly in financials, are more sensitive to interest rate changes, and stable rates can enhance earnings from lending activities [9] - Several value ETFs, including Vanguard Value ETF (VTV) and Utilities Select Sector SPDR Fund (XLU), have shown positive performance recently, with VTV adding 1% and XLU gaining 4.6% [10][11]