The U.S. Large Cap Value asset class has outperformed U.S. Large Cap Blend by 0.96% CAGR over the last 47 years- The oldest Large Cap Value ETF has outperformed an S&P 500 index fund by 0.98% CAGR over the last 21 years
- There are 96 ETFs available in the Large Cap Value category. This article focuses on the 24 that have been available for 10 years or longer
U.S. Large Cap Value vs U.S. Large Cap Blend: January 1972 – September 2019
Source: https://www.portfoliovisualizer.com/
The oldest available U.S. Large Cap Value ETF is the SPDR® Dow Jones® Industrial Average ETF Trust (DIA). DIA’s inception date was on January 13, 1998. Since inception DIA has outperformed an S&P 500 index fund by 0.98% CAGR. And this large cap value fund was able to achieve this outperformance with slightly less volatility.
DIA vs S&P 500 Index fund: February 1998 – September 2019
DIA vs SPY: January 20, 1998 – October 17, 2019
Source: https://www.koyfin.com/home
There are 96 ETFs available in the Morningstar Large Value category. 24 of these funds have inception dates before October 20, 2009. I have compared all 24 of these funds head-to-head based on long-term performance only. The chart below shows how these 24 older ETFs ranked, and the highlights depict the superlative in each metric.
Source: https://www.morningstar.com/
The four best performing large cap value ETFs were FVD, DIA, SDY and PWV. The charts below show how these 4 ETFs have performed head-to-head in the past.
FVD vs DIA vs SDY vs PWV: December 2005 – September 2019
FVD vs DIA vs SDY vs PWV vs SPY: November 15, 2005 – October 17, 2019
FVD vs DIA: August 27, 2003 – October 21, 2019
DIA vs SDY: November 15, 2005 – October 21, 2019
SDY vs PWV: November 15, 2005 – October 21, 2019
Each of these top performing U.S. Large Cap Value funds are good long-term investment vehicles; but they are managed much differently and vary considerably in their holdings. To get a better idea of how these 4 funds are managed, let’s look at their stated investment objectives:
FVD – The First Trust Value Line® Dividend Index Fund is an exchange-traded index fund. The objective of the Fund is to seek investment results that correspond generally to the price and yield, before fees and expenses, of the Value Line® Dividend Index. The index begins with the universe of stocks that Value Line® gives a SafetyTM Ranking of #1 or #2 using the Value Line® SafetyTM Ranking System. All registered investment companies, limited partnerships and foreign securities not listed in the U.S. are removed from this universe. From those stocks, Value Line® selects those companies with a higher than average dividend yield, as compared to the indicated dividend yield of the Standard & Poor’s 500 Composite Stock Price Index. Value Line® then eliminates those companies with an equity market capitalization of less than $1 billion. The index seeks to be equally weighted in each of the securities in the index. The index is rebalanced on the application of the above model on a monthly basis.
DIA – The SPDR® Dow Jones® Industrial AverageSM ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Dow Jones Industrial AverageSM (the “Index”). The Dow Jones Industrial AverageSM (DJIA) is composed of 30 “blue-chip” U.S. stocks. The DJIA is the oldest continuous barometer of the U.S. stock market, and the most widely quoted indicator of U.S. stock market activity. The DJIA is a price weighted index of 30 component common stocks.
SDY – The SPDR® S&P® Dividend ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P® High Yield Dividend AristocratsTM Index (the “Index”). The Index screens for companies that have consistently increased their dividend for at least 20 consecutive years, and weights the stocks by yield. Due to the index screen for 20 years of consecutively raising dividends, stocks included in the Index have both capital growth and dividend income characteristics, as opposed to stocks that are pure yield.
PWV – The Invesco Dynamic Large Cap Value ETF (Fund) is based on the Dynamic Large Cap Value Intellidex℠ Index (Index). The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index. The Index is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure. The Style Intellidexes apply a rigorous 10 factor style isolation process to objectively segregate companies into their appropriate investment style and size universe. The Fund and the Index are rebalanced and reconstituted quarterly in February, May, August and November.
The U.S. Large Cap Value asset class has a long history of great returns. For this reason, it is worth considering having a Large Value ETF as a core position in an equity portfolio. With 96 large cap value ETFs available, the decision to pick one can be daunting. It is was my objective that this article will help make this decision a little bit easier for the DIY investor.
Thank you for taking time to read this article. If you found it useful, please share it with a friend.
Respectfully yours, Micah McDonald, aka the Deep Value ETF Accumulator
Previous Deep Value ETF Accumulator articles on U.S. Large Cap Value ETFs:
Best Long-Term Performance U.S. Large Cap Value ETFs 1.2
And the Best U.S. Large-Cap-Value ETF Award goes to… 1.1
Disclosure: We currently own shares of FVD and we intend to buy more shares in the future. I am not a professional investment advisor. Please perform you own due diligence or seek the advice of a Registered Investment Advisor before investing in any security mentioned in this article. This website contains affiliate links to M1 Finance and Google AdSense.