NEW YORK (TheStreet) -- With Alcoa's (AA) - Get Report analyst beating quarterly report behind us, we are now in the full swing for what is shaping up to be an optimistic earnings season. Investors looking for a way to invest in this fast-paced time for the market should look to a strong, stable, and diversified fund designed to track U.S. equities.
iShares Dow Jones Select Dividend Index Fund
is one of my favorite ETFs which meet these criteria. I currently carry this fund in a number of my client and subscriber ETF portfolios, including
Because it is designed to track a basket of 100 well-known companies hailing from a across the investment spectrum, DVY will benefit from a positive round of earnings. Among the fund's top positions are household names such as
DVY does not particularly depend on the performance of these few holdings, however. In total, the fund's top 10 positions account for less than 20% of the fund's total portfolio.
The largest percentage of DVY's index is comprised of large names such as those listed above and
considers the fund to be large-cap value oriented.
However, DVY also sets aside a considerable portion of its assets for companies considered midcap. This has allowed the fund's year-to-date performance in 2010 to fall between those of dedicated large cap funds such as
SPDR S&P 500 ETF
and outperforming mid-cap focused products such as the
iShares S&P 400 MidCap Index Fund
If the markets are due for a leg higher during this current earnings season, DVY should continue to perform in this fashion.
While I am bullish looking towards the future, in watching the markets this year I also understand that this investing environment can be an unpredictable one. Although its performance will be strongest in times of strength, DVY also has a few lines of defense that will ensure that investors are protected in the event that the market turns south.
From a sector perspective, DVY is defensive minded. Utilities and industrials represent two of the largest slices of the fund's index. Together, they make up over 40% of its total portfolio. The consumer also heavily influences DVY's performance, with consumer goods and services accounting for an additional 24% slice.
While this breakdown will provide support if the market slips, DVY's strong dividend will ensure that investors continue to see consistent income no matter the economic conditions.
DVY's index is dedicated to picking out companies which have offered a relatively high dividend on a constant basis. Currently, the fund is yielding nearly 4%.
As we head deeper into this earnings season, investors should stock up on well balanced funds that have exposure to U.S. companies that will perform well. However, at the same time, it is important not to forget the overarching economic issues that continue to weigh on the mood of the market. A fund such as DVY will provide investors with a chance to benefit from prosperity and protect against turmoil.
Written by Don Dion in Williamstown, Mass.
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At the time of publication, Dion Money Management was long the iShares Dow Jones Select Dividend Index Fund.
Don Dion is president and founder of
, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.
Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.