Large Cap ETFs Ready to Come Back Into Favor?

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 |  Includes: DIA, DVY, IVE, IWD, SDY, VIG, VTV
by: MyPlanIQ

Despite the crises in Japan, North Africa and the Middle East, US growth appears to still be on track. The labor market has shown a recovery and last quarter’s GDP of 3.1% compares to the 2.8% median estimates of economists. This shows that the economy is moving in the right direction despite consumer sentiment being on the low side which is mainly due to oil price and the disaster of Japan.

U.S. Asset Class Returns
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Click to enlarge
In the asset class comparisons above we see that U.S. Large Cap Growth gave the highest 5 year return and U.S. Mid Cap Value gave the highest one year return.
In the US Equities class, Large Cap Value is towards the bottom of the table as investors are looking for more risk with higher returns. However, with there being evidence of external risk, looking at large cap (safe) and value (higher return) may be an interesting compromise.
Description
Symbol
1 Yr
3 Yr
5 Yr
Avg. Volume(NYSE:K)
1 Yr Sharpe
SPDR Dow Jones Industrial Aver
DIA
12.09%
0.73%
3.17%
7,849
72.34%
Vanguard Dividend Appreciation
VIG
11.54%
3.01%
NA
778
69.21%
Vanguard Value ETF
VTV
11.43%
-0.38%
1.43%
446
62.67%
iShares Dow Jones Select Divid
DVY
11.23%
-1.78%
-1.82%
724
73.78%
iShares Russell 1000 Value Ind
IWD
11.04%
-1.14%
0.29%
2,112
59.07%
iShares S&P 500 Value Index
IVE
10.73%
-1.73%
-0.29%
834
55.86%
SPDR S&P Dividend
SDY
8.88%
3.44%
2.12%
773
54.49%
Click to enlarge
This chart shows the top large cap value ETFs based on volume and return. Without sufficient volume, any ETF can suffer low liquidity or high trading friction.
The best performers in the US Large cap value stocks are:
1. SPDR Dow Jones Industrial Aver (NYSEARCA:DIA)
2. Vanguard Dividend Appreciation (NYSEARCA:VIG)
DIA is the star performer in terms of return with 1 year returns of 12.09% and an average volume of 7.8 million. The 5 year yields are also the highest at 3.17% giving us added confidence.
VIG is the second best performer with a return of 11.54% over the past year. Although the VIG is a new ETF, being in market for less than 5 years, the overall performance is very good with three year yields of 3%.
The large cap value ETFs are those whose company market caps are above $10 billion. The size of the underlying holdings gives the large cap ETF favorable advantage in the event of a volatile period.
Currently Large Caps are out of favor with those who are looking for returns but in these days of increasing risk awareness, perhaps they will come back into fashion.

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

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.