Should VictoryShares US EQ Income Enhanced Volatility Wtd ETF (CDC) Be on Your Investing Radar?

Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the VictoryShares US EQ Income Enhanced Volatility Wtd ETF (CDC) is a passively managed exchange traded fund launched on 07/01/2014.

The fund is sponsored by Victory Capital. It has amassed assets over $702.24 M, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 3.01%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Utilities sector--about 24.70% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Duke Energy Corp. (DUK) accounts for about 1.56% of total assets, followed by Occidental Petroleum Corp (OXY) and Xcel Energy Inc. (XEL).

The top 10 holdings account for about 14.76% of total assets under management.

Performance and Risk

CDC seeks to match the performance of the CEMP U.S. Large Cap High Dividend 100 Long/Cash Volatility Weighted Index before fees and expenses. The CEMP U.S. Large Cap High Dividend 100 Long/Cash Volatility Weighted Index is an unmanaged index and generally consists of the common stock of the 100 highest dividend yielding stocks of the CEMP U.S. 18 Large Cap 500 Volatility Weighted Index.

The ETF has added roughly 0.83% so far this year and was up about 9.40% in the last one year (as of 06/28/2018). In the past 52-week period, it has traded between $42.88 and $48.75.

The ETF has a beta of 0.73 and standard deviation of 11.20% for the trailing three-year period, making it a medium risk choice in the space. With about 103 holdings, it effectively diversifies company-specific risk.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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V-SHRS USEQ EVW (CDC): ETF Research Reports
 
Xcel Energy Inc. (XEL) : Free Stock Analysis Report
 
Duke Energy Corporation (DUK) : Free Stock Analysis Report
 
Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
 
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