Seeking Alpha
Recommended for you:
-
dasdasdasdadas
Profile| Send Message|
( followers)  

ETFs are becoming ubiquitous as their appeal drives them to increasing use in building portfolios. We are going through the process of selecting the best ETFs from a returns perspective to build a plan that has a reasonable number of funds and yet can deliver strong returns.

So far, having looked at large cap blend and growth ETFs, this is the leader board (click to enlarge images):

In this article, we move on to cover large cap value ETFs with the goal of providing the same ranking.

We will follow the same process -- rank and determine a cutoff based on trading volume for liquidity and low trading friction, then rank them based on their returns and assign a score.

We start with an extensive list of large cap value ETFs:

Symbol

Name

BVL

ELEMENTS Benjamin Graham Large

BVT

ELEMENTS BG Total Market ETN

CVY

Guggenheim Multi-Asset Income

DEF

Guggenheim Defensive Equity

DHS

WisdomTree Equity Income

DIA

SPDR Dow Jones Industrial Aver

DLN

WisdomTree LargeCap Dividend

DOD

ELEMENTS DJ High Yield Select

DTD

WisdomTree Total Dividend

DTN

WisdomTree Dividend ex-Financi

DVY

iShares Dow Jones Select Divid

EPS

WisdomTree Earnings 500

EXT

WisdomTree Total Earnings

EZY

WisdomTree LargeCap Value

FDL

First Trust Morningstar Div Le

FDV

First Trust Strategic Value In

FTA

First Trust Large Cap Value Op

FVD

First Trust Value Line Dividen

GVT

Grail American Beacon Large Ca

IVE

iShares S&P 500 Value Index

IWD

iShares Russell 1000 Value Ind

IWX

iShares Russell Top 200 Value

JKF

iShares Morningstar Large Valu

MGV

Vanguard Mega Cap 300 Value In

NY

iShares NYSE 100 Index

PFM

PowerShares Dividend Achievers

PRF

PowerShares FTSE RAFI US 1000

PWV

PowerShares Dynamic Large Cap

RPV

Rydex S&P 500 Pure Value

SCHV

Schwab U.S. Large-Cap Value ET

SDY

SPDR S&P Dividend

SPYV

SPDR S&P 500 Value ETF

VIG

Vanguard Dividend Appreciation

VONV

Vanguard Russell 1000 Value In

VOOV

Vanguard S&P 500 Value Index E

VTV

Vanguard Value ETF

VYM

Vanguard High Dividend Yield I

We reviewed daily trading volume data and applied a cutoff below 300,000. This left us with a choice of four ETFs with sufficient volume to be considered further.

Symbol
Name
SPDR Dow Jones Industrial Aver
iShares Russell 1000 Value Ind
SPDR S&P Dividend
iShares S&P 500 Value Index
Vanguard Dividend Appreciation
iShares Dow Jones Select Divid
Vanguard Value ETF

These seven funds were examined for their returns performance and given an overall score.

Ticker

Description

5yr AR%

3yr AR%

1yr AR%

VTV

Vanguard Value ETF

12.27%

-6.03%

18.11%

DIA

SPDR Dow Jones Industrial Aver

4.35%

0.33%

19.15%

SDY

SPDR S&P Dividend

2.73%

1.24%

16.87%

VIG

Vanguard Dividend Appreciation

0.00%

3.76%

15.39%

IWD

iShares Russell 1000 Value Ind

1.14%

-2.81%

18.67%

IVE

iShares S&P 500 Value Index

0.76%

-3.64%

18.41%

DVY

iShares Dow Jones Select Divid

-1.29%

-5.41%

17.87%

We can see that value stocks have significant volatility and will need to be handled with some care. VTV looks like it is going to give you a wild ride but the upside is there. VIG is intruiging -- it's new but it shows consistent results. SDY is also interesting -- being a dividend ETF, it also has lower volatility.

For this exercise, we are going to take VTV, SDY and VIG through to the next round of investigation.

2005
2006
2007
2008
2009
2010
2011
Draw Down(%)
6.168
6.9
12.813
47.391
32.273
15.947
1.591
Return(%)
8.66
24.192
1.254
-35.485
19.526
13.571
4.407
Draw Down(%)
1.599
4.682
14.953
36.081
34.185
11.944
1.385
Return(%)
1.106
17.727
-6.696
-23.962
19.175
15.733
0.962
Draw Down(%)
NA
6.168
8.359
36.77
25.868
13.581
1.541
Return(%)
NA
7.364
5.036
-26.083
20.279
14.307
2.052

Each of these funds have interesting properties and the selection is almost arbitrary. On balance, VTV and VIG are going to be the likely selections into the final set of funds to build a portfolio.

So we have now completed the large cap ETFs and we can summarize their performance in a graph.

In the next article, we will start reviewing the mid cap ETFs.

Disclosure: MyPlanIQ does not have any business relationship with the company or companies providing the ETFs mentioned in this article. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

Source: U.S. Large Cap Value Rankings Boost ETF Portfolios