In the face of the seemingly persistent doom and gloom that plagued the latter half of 2011, the two funds have managed to handedly outpace broad-based ETFs like the SPDR S&P 500 ETF (SPY).
The real winner in the realm of dividend ETFs, however, has been the iShares Dow Jones High Yield Equity Fund (HDV). The new kid on the block, HDV powered past its veteran competitors, securing over 7% gains during the past six-month period. This was not an unusual occurrence for the fund, though.
Since its late-march unveiling, HDV has consistently trumped DVY and SDY. With this type of standout strength, came popularity. The fund's average trading volume currently stands at over 220,000.HDV appears to have already cemented its place within the ETF universe. Now as we prepare to kick off 2012, the question remains: Will the fund maintain its lead in the New Year? In order to answer to this question, one needs to look under the fund's hood. By uncovering the factors that separate HDV from its competitors, it becomes easier to see what has, and could continue to contribute to its remarkable divergence. Upon initial inspection it becomes clear that HDV is very different from the elder DVY. In terms of style, the younger fund leans solidly into the large-cap category. In fact, according to Morningstar's style box, HDV can be seen flirting with a giant-cap designation. DVY, though officially considered a large cap product, toes the line between a large- and mid-cap classification. During periods of market euphoria, smaller and more-volatile companies like those comprising DVY tend to fall into favor as increasingly confident investors seek out upside potential. In tumultuous environments, on the other hand, these same companies often lag as individuals flee from risk. In the event that the turmoil that defined 2011 persists into the New Year, HDV's dedication to stable large- and mega-cap companies will likely help the fund continue to outperform.