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In the Large Cap category there are many more ETFs than just the 10 we've featured, given the tsunami of ETF issuance. Further, some major issues have been divided into value, growth and blended segments. To simplify matters for investors, and to be consistent with previous practices, we're still just highlighting what we feel are the top 10 choices. We also feature the leading "value" ETF and ETF linked to an "enhanced" index.

Remember being the first to market in any sector is most important to issuers and this is much more important in major market sector ETFs like large-caps. In fact, according to Lipper's Jeff Tjornehojas of 2012, nearly half of existing ETF assets is in just two dozen funds with over 1,000 ETFs now issued. The Large Cap sector holds an outsized percentage of these assets.

The issues chosen represent a broad cross section of domestic issues from a variety of sponsors. Most issues are seasoned being issued long ago with substantial assets under management and good liquidity. We're not necessarily recommending one issue over another; rather we're just trying to feature those issues that aren't repetitive. If other choices are available these are mentioned where applicable.

Within this sector we have combined choices for growth, value and a blend of these styles. There are occasional periods when value outperforms growth and vice versa, but even over intermediate periods they tend to achieve a similar total return. Others may disagree about this conclusion citing studies demonstrating superior returns of one to the other. However, most of these experiences are transitory and are driven by various economic conditions including monetary policies and the overall market environment. Some investors wish to pursue what they believe is a more conservative value approach while others prefer growth both choices are understandable.

We feature a technical view of conditions from monthly chart views. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Some more interested in a fundamental approach may not care so much about technical issues preferring instead to buy when prices are perceived as low and sell for other reasons when high; but, this is not our approach.

Premium members to the ETF Digest receive added signals when markets become extended such as DeMark triggers to exit overbought/oversold conditions.

For traders and investors wishing to hedge, leveraged and inverse issues are available to utilize from ProShares and Direxion and where available these are noted.

#10: iShares Russell 3000 Index ETF (IWV)

IWV follows this index which is capitalization-weighted consisting of the largest 3000 companies in the U.S. The fund was launched in May 2000. The expense ratio is 0.21%. AUM equal $3,331M and average daily trading volume is 202K shares.

As of May 2012 the annual dividend yield 1.30% and YTD return is 8.26%. IWV trades commission free at Fidelity and TD Ameritrade.

Data as of May 2012

IWV Top 10 Holdings and Weightings

  • Apple, Inc. (NASDAQ:AAPL): 3.47%
  • Exxon Mobil Corporation (NYSE:XOM): 2.73%
  • International Business Machines Corp (NYSE:IBM): 1.61%
  • Microsoft Corporation (NASDAQ:MSFT): 1.53%
  • Chevron Corp (NYSE:CVX): 1.38%
  • General Electric Co (NYSE:GE): 1.33%
  • AT&T Inc (NYSE:T): 1.25%
  • Pfizer Inc (NYSE:PFE): 1.16%
  • Johnson & Johnson (NYSE:JNJ): 1.15%
  • Procter & Gamble Co (NYSE:PG): 1.14%

#9: Invesco PowerShares Dynamic Market ETF (NYSEARCA:PWC)

PWC follows the Dynamic Market Intellidex Index which is an "enhanced" index comprised of U.S. stocks from each sector identified as having the greatest capital appreciation potential pursuant to a proprietary Amex Intellidex quantitative methodology.

These characteristics include lower price to book, higher dividends and lower PE ratios among other considerations. The fund was launched in May 2003. The expense ratio is 0.59%. AUM equal $124M and average daily trading volume less than 7K shares. As of May 2012 the annual dividend yield was roughly 0.88% and YTD return 9.88%. The 1 YR return was -5.70%.

Remember enhanced indexes can substantially outperform on the upside but underperform on the downside. PWC has been around for quite some time and has been a good performer overall in this regard.

Data as of May 2012

PWC Top Ten Holdings & Weightings

  • Marathon Petroleum Corp (NYSE:MPC): 4.43%
  • Exxon Mobil Corporation : 4.35%
  • Altria Group Inc. (NYSE:MO): 3.47%
  • CVS Caremark Corp (NYSE:CVS): 3.43%
  • Apple, Inc. : 3.11%
  • CF Industries Holdings Inc (NYSE:CF): 2.86%
  • Alliance Data Systems Corporation (NYSE:ADS): 2.80%
  • MasterCard Incorporated Class A (NYSE:MA): 2.74%
  • Visa, Inc. (NYSE:V): 2.72%
  • Delta Air Lines Inc (NYSE:DAL): 2.68%

#8: iShares Dow Jones U.S. Total Market ETF (NYSEARCA:IYY)

IYY follows the Dow Jones U.S. Index which measures the performance of the U.S. equity broad markets. The fund was launched in June 2000. The expense ratio is 0.20%. AUM equals $647M and the average trading volume is 61K shares.

As of May 2012, the annual dividend yield is 1.32% and YTD return is 8.21%. The I YR return was 0.57%.

Data as of May 2012

IYY Top Ten Holdings & Weightings

  • Apple, Inc. : 3.69%
  • Exxon Mobil Corporation : 2.82%
  • Microsoft Corporation : 1.63%
  • International Business Machines Corp : 1.55%
  • Chevron Corp : 1.45%
  • General Electric Co : 1.41%
  • AT&T Inc : 1.33%
  • Johnson & Johnson : 1.21%
  • Pfizer Inc : 1.20%
  • Procter & Gamble Co : 1.19%

#7: iShares S&P 500 Value ETF (NYSEARCA:IVE)

IVE follows the S&P 500/Citigroup Value Index which carves out those securities with value characteristics from the S&P 500 index. The fund was launched in May 2000. The expense ratio is 0.19%. AUM equals $4,245M and average daily trading volume exceeds 416K shares.

As of May 2012 the annual dividend yield is 1.67% and YTD return 7.42%. The 1 YR return was -1.69%. IVE trades commission free at Fidelity and TD Ameritrade.

Data as of May 2012

IVE Top Ten Holdings & Weightings

  • General Electric Co : 3.60%
  • AT&T Inc : 3.39%
  • Wells Fargo & Co (NYSE:WFC): 3.06%
  • Pfizer Inc : 3.00%
  • JPMorgan Chase & Co (NYSE:JPM): 2.85%
  • Exxon Mobil Corporation : 2.55%
  • Berkshire Hathaway Inc Class B (NYSE:BRK.B): 2.46%
  • Cisco Systems Inc (NASDAQ:CSCO): 1.89%
  • Microsoft Corporation : 1.79%
  • Chevron Corp : 1.68%

#6: iShares Russell 1000 Growth ETF (NYSEARCA:IWF)

IWF follows the top 1000 growth stocks within the Russell 3000 Index. The fund was launched in May 2000. The expense ratio is 0.20%. AUM equal $15,930M with average daily trading volume 2.1M shares. As of May 2012 the annual dividend yield is 0.96%.

The YTD return is 10.50% and the 1 YR return was 3.66%. IWF trades commission free at Fidelity and TD Ameritrade.

Data as of May 2012

IWF Top Ten Holdings & Weightings

  • Apple, Inc. : 7.38%
  • Exxon Mobil Corporation : 4.29%
  • International Business Machines Corp : 3.43%
  • Microsoft Corporation : 3.24%
  • Google, Inc. Class A (NASDAQ:GOOG): 2.08%
  • Coca-Cola Co (NYSE:KO): 2.06%
  • Philip Morris International, Inc. (NYSE:PM): 1.97%
  • Oracle Corporation (NYSE:ORCL): 1.54%
  • Qualcomm, Inc. (NASDAQ:QCOM): 1.46%
  • PepsiCo Inc (NYSE:PEP): 1.42%

#5: iShares Russell 1000 Index ETF (NYSEARCA:IWB)

IWB tracks largest 1000 stocks within the Russell Index. The fund was launched in May 2000. The expense ratio is 0.15%. AUM equals $6.695 M and daily trading volume is roughly 1.1M shares. As of May 2012 the annual dividend yield based on current prices is 1.39% and YTD return 8.49%.

The 1 YR return was 0.87%. IWN trades commission free at Fidelity and TD Ameritrade.

Leveraged long or short issues are available from Direxion Shares.

Data as of May 2012

IWB Top Ten Holdings & Weightings

  • Apple, Inc. : 3.76%
  • Exxon Mobil Corporation : 2.96%
  • International Business Machines Corp : 1.75%
  • Microsoft Corporation : 1.66%
  • Chevron Corp : 1.49%
  • General Electric Co : 1.45%
  • AT&T Inc : 1.36%
  • Pfizer Inc : 1.26%
  • Johnson & Johnson : 1.24%
  • Procter & Gamble Co : 1.24%

#4: Vanguard Total Stock Market ETF (NYSEARCA:VTI)

VTI tracks the MSCI U.S. Broad Market Index. The index represents 99.5% of the total market capitalization of the U.S. common stocks traded on the major markets. The fund was launched in May 2001. The expense ratio is only 0.06%. AUM equal $21.187M and average daily trading volume is 1.7M shares. As of May 2012 the annual dividend yield is 1.80% and YTD return 8.78%.

The 1 YR return was 0.88%. VTI trades commission free at TD Ameritrade and Vanguard.

Data as of May 2012

VTI Top Ten Holdings & Weightings

  • Exxon Mobil Corporation : 2.95%
  • Apple, Inc. : 2.68%
  • International Business Machines Corp : 1.57%
  • Chevron Corp : 1.52%
  • Microsoft Corporation : 1.40%
  • General Electric Co : 1.36%
  • Procter & Gamble Co : 1.31%
  • Johnson & Johnson : 1.28%
  • AT&T Inc : 1.28%
  • Pfizer Inc : 1.21%

#3: SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA)

DIA follows the popular Dow Jones Industrial Average Index of 30 stocks which is a "price-weighted" Index meaning the highest priced stocks carry more weight which you can see in the top holdings below. The fund was launched in January 1998. The expense ratio is 0.16%. AUM equal $11,318M and average daily trading volume is 6M shares. As of May 2012 the annual dividend yield is currently 1.82% and YTD return was 5.46%. The 1 YR return was 0.83%.

Remember the top 5 stocks account for 35% of performance currently.

Leveraged long and short issues are available from ProShares.

Data as of May 2012

DIA Top Ten Holdings & Weightings

  • International Business Machines Corp : 11.85%
  • Chevron Corp : 6.10%
  • Caterpillar Inc (NYSE:CAT): 5.88%
  • McDonald's Corporation (NYSE:MCD): 5.58%
  • 3M Co (NYSE:MMM): 5.11%
  • Exxon Mobil Corporation : 4.94%
  • United Technologies Corp (NYSE:UTX): 4.67%
  • Boeing Co (NYSE:BA): 4.39%
  • Coca-Cola Co : 4.37%
  • Johnson & Johnson : 3.72%

#2: Guggenheim S&P 500 Equal Weight ETF (NYSEARCA:RSP) formerly Rydex SGI

RSP also follows the S&P 500 Index but breaks the index up into equal weights vs weighted SPY and IVV. Generally, we prefer using RSP for our portfolios when long given upside returns have been marginally superior. RSP was launched in April 2003. The expense ratio is 0.40%. AUM equal $3.045M and average daily trading volume is 606K shares. As of May 2012 the annual dividend yield is over 1.39% and the YTD return was 7.95%. The 1 YR return was -2.97%.

This index is interesting in that it gives investors the opportunity to see a more realistic view of how the most important index by breadth is really doing overall. If they equal weighted DIA you'd be shocked by the slack performance.

Data as of May 2012

RSP Top Ten Holdings & Weightings

  • Expedia, Inc. (NASDAQ:EXPE): 0.27%
  • Watson Pharmaceuticals Inc. (WPI): 0.25%
  • Amazon.com Inc (NASDAQ:AMZN): 0.25%
  • Sunoco, Inc. (NYSE:SUN): 0.24%
  • TripAdvisor Inc (NASDAQ:TRIP): 0.24%
  • American International Group Inc (NYSE:AIG): 0.24%
  • Edwards Lifesciences Corporation (NYSE:EW): 0.24%
  • Red Hat, Inc. (NYSE:RHT): 0.23%
  • Priceline.com, Inc. (NASDAQ:PCLN): 0.23%
  • Family Dollar Stores, Inc. (NYSE:FDO): 0.23%

#1: SPDR S&P 500 ETF (NYSEARCA:SPY)

SPY tracks the S&P 500 Index and holds the distinction of being the original ETF created by Nate Most for the AMEX in January 1993. (Nate passed away at the age of 90 in 2004 a few months after we had a wonderful lunch and meeting with him. The expense ratio is only 0.09%.

AUM equal $98,866M and average daily trading volume is over 147M shares. As of May 2012 the annual dividend yield is 1.48% and he YTD return is 8.16%. The 1 YR return is 1.56%.

Inverse and leveraged long and short issues are available from ProShares.

Data as of May 2012

SPY Top Ten Holdings & Weightings

  • Apple, Inc. : 4.31%
  • Exxon Mobil Corporation : 3.21%
  • International Business Machines Corp : 1.90%
  • Microsoft Corporation : 1.89%
  • Chevron Corp : 1.67%
  • General Electric Co : 1.64%
  • AT&T Inc : 1.54%
  • Johnson & Johnson : 1.41%
  • Wells Fargo & Co : 1.39%
  • Procter & Gamble Co : 1.39%

We rank the top 10 ETF by our proprietary stars system as outlined below. However, given that we're sorting these by both short and intermediate issues we have split the rankings as we move from one classification to another.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

While we've mixed some issues by style and scope you can see most are trending along the same basic path. It makes choices less hazardous overall frankly. It's also important to remember that ETF sponsors have their own competitive business interests when issuing products which may not necessarily align with your investment needs.

New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned.

Source: Top 10 Large Cap ETFs