What is the  DVND ETF ?
4 min read
By Beqa Bumbeishvili, ETF Insider

What is the DVND ETF ?

In today's fast-paced financial markets, investors are constantly seeking diverse and efficient ways to grow their wealth. Exchange-Traded Funds (ETFs) have emerged as a popular investment vehicle due to their flexibility, diversification, and low-cost structure. In this article, we will delve into the DVND ETF, exploring its overview, underlying assets, benefits, and crucial considerations before investing.

DVND ETF: Overview

The DVND ETF, short for "Dividend ETF," is an investment fund that focuses on equity securities of U.S. large-cap companies that have a history of consistently paying dividends. Managed by Fort Washington Investment Advisors, Inc., this ETF aims to generate returns by investing at least 80% of its assets in such dividend-paying companies. The fund's policy allows for adjustments, subject to a 60-day notice to shareholders, to maintain its core focus.

DVND ETF Underlying and Exposure: What Does It Track and How?

The DVND ETF selects its underlying assets from companies with sustainable competitive advantages, which are likely to result in excess profits to support future dividend payments. The selection process involves evaluating a company's barrier to entry, which can be created through factors such as cost advantage, economies of scale, high customer loyalty, or government barriers like licenses or subsidies. The ETF seeks to maintain a portfolio of 40 to 55 high-quality companies, with residual cash and cash equivalents representing less than 10% of the total net assets.

DVND overlap What is the  DVND ETF ?DVND overlap What is the DVND ETF ?

DVND ETF: Benefits of Investing

Investing in the DVND ETF comes with several advantages. Firstly, the fund offers exposure to well-established U.S. large-cap companies with a strong history of paying dividends, providing investors with potential income streams. Secondly, the ETF's diversification across multiple companies helps reduce individual stock risk. Additionally, the low expense ratio and ease of trading, as with any ETF, make it an attractive option for investors looking for a cost-effective way to invest in a basket of dividend-paying stocks.

DVND ETF: Considerations Before Investing

While the DVND ETF may present compelling investment opportunities, it is essential for investors to consider certain factors before committing their funds. As with any investment, past performance is not indicative of future results, and there is no guarantee that dividends will be paid or that the fund will achieve its objectives. Investors should also evaluate their risk tolerance, investment goals, and time horizon to ensure the DVND ETF aligns with their overall portfolio strategy.

<h2>Conclusion: <h2> The DVND ETF offers investors exposure to a carefully selected portfolio of U.S. large-cap companies with a history of consistent dividend payments. It provides diversification, potential income streams, and cost-effectiveness, making it an appealing option for investors seeking long-term growth. However, investors should always conduct thorough research and consider their individual financial circumstances before making any investment decisions.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The content presented here does not endorse or recommend any specific financial products. Readers are advised to consult with a qualified financial advisor before making any investment decisions. The author of this article is not providing any investment advisory services.

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  • What is the DVND ETF?

    The DVND ETF, also known as the Northern Trust Quality Dividend Defensive Index Fund, is an exchange-traded fund that aims to provide exposure to a high-quality income-oriented universe of long-only U.S. equity securities. It focuses on long-term capital growth and targets an overall beta generally between 1.0 to 1.5 times that of the Northern Trust 1250 Index.

  • How does the DVND ETF select its underlying index components?

    The DVND ETF's underlying index selection process begins with all securities in the Northern Trust 1250 Index. It then applies a proprietary scoring model to remove securities in the lowest quintile of quality and those that do not pay dividends. The scoring model considers metrics related to management efficiency, profitability, and cash flow obtained from company filings.

  • What types of companies are included in the DVND ETF?

    The DVND ETF includes companies from a broad range of sectors in the U.S. equity market. The focus is on high-quality, income-oriented companies with a history of paying dividends, aiming to provide investors with a defensive strategy.

  • How does the DVND ETF operate?

    The DVND ETF uses a passive or indexing approach, aiming to replicate the performance of its underlying index. It employs a representative sampling strategy, which means it may not hold all the securities in the underlying index but invests in a representative sample with similar investment characteristics.

  • What are the advantages of investing in the DVND ETF?

    Investing in the DVND ETF offers exposure to a portfolio of high-quality U.S. companies with a focus on dividends and long-term capital growth. The defensive strategy may appeal to investors seeking stability during market declines.