Aficionados of index funds are probably aware of "exchange-traded funds" (ETFs), which are stock-like beasts typically based on indexes. The best-known ETFs are probably "Spiders," properly known as Standard & Poor's Depositary Receipts
There are now many ETFs out there, based on large-cap and small-cap indexes, industries such as utilities, and other market niches. A new kid on the block, though, is the iSharesDow Jones Select Dividend Index Fund
The index's components get reviewed and rebalanced yearly, and they're weighted according to their dividend, not to their market value or price. One reason that DVYs will be of great interest to many investors is recent legislation that reduced the tax rate on dividends to 5% or 15%, depending on your tax bracket. Another reason to like DVYs and many other ETFs is that they often sport lower fees than their fund counterparts. While the average stock dividend mutual fund has an expense ratio of 1.40% (according to Morningstar), DVYs only charge 0.40%, a marked difference.
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