Billions Wiped Out as Stock-Safety Trade on Wall Street Misfires

Reeling from a bear market last year, beaten-up investors decided to send more than $60 billion to exchange-traded funds focusing on dividends.

Eleven months later, the trade is misfiring.

Rather than give shelter in a stormy season, the largest dividend ETFs have been left behind by a tech-obsessed market whose biggest proxies have surged 15% or more. At the bottom of the leader board is the $18 billion iShares Select Dividend ETF (ticker DVY), down 5.4% on a total return basis after all-in bets on utilities and financial stocks fizzled.

It’s the latest lesson on the dangers of market timing. Investors wanted exposure to companies with a history of paying out profits as a precaution amid the Federal Reserve’s most aggressive tightening cycle in 40 years. Instead they were saddled with underperforming companies that proved especially vulnerable when yields shot higher.

Dividend ETFs Fall Behind S&P 500