A smart beta exchange traded fund, the iShares Core Dividend Growth ETF (DGRO) debuted on 06/10/2014, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Blackrock. It has amassed assets over $42.14 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. DGRO, before fees and expenses, seeks to match the performance of the Morningstar US Dividend Growth Index.
The Morningstar US Dividend Growth Index is composed of U.S. equities with a history of consistently growing dividends.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With one of the least expensive products in the space, this ETF has annual operating expenses of 0.08%.
The fund has a 12-month trailing dividend yield of 1.91%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
DGRO's heaviest allocation is in the Financials sector, which is about 21.9% of the portfolio. Its Information Technology and Healthcare round out the top three.
Looking at individual holdings, Broadcom Inc (AVGO) accounts for about 3.33% of total assets, followed by Apple Inc (AAPL) and Microsoft Corp (MSFT).
Its top 10 holdings account for approximately 27.62% of DGRO's total assets under management.
Performance and Risk
So far this year, DGRO return is roughly 12.16%, and is up about 19.61% in the last one year (as of 07/24/2026). During this past 52-week period, the fund has traded between $64.13 and $77.60.
The ETF has a beta of 0.77 and standard deviation of 11.57% for the trailing three-year period, making it a medium risk choice in the space. With about 401 holdings, it effectively diversifies company-specific risk .
Alternatives
iShares Core Dividend Growth ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco S&P 500 Quality ETF (SPHQ) tracks S&P 500 Quality Index and the Vanguard Dividend Appreciation Index Fund ETF Shares (VIG) tracks NASDAQ US Dividend Achievers Select Index. Invesco S&P 500 Quality ETF has $19.42 billion in assets, Vanguard Dividend Appreciation Index Fund ETF Shares has $110.16 billion. SPHQ has an expense ratio of 0.15% and VIG changes 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value
Bottom Line
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iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).