Stock-Safety Trade Backfires, Resulting in Billions Lost on Wall Street

Dividend-focused exchange-traded funds (ETFs) have underperformed in the current tech-driven market, with the largest dividend ETFs experiencing losses while tech stocks surged. Investors sought exposure to dividend-paying companies as a precaution during the Federal Reserve's tightening cycle, but instead ended up with underperforming stocks that were vulnerable to rising yields. The $18 billion iShares Select Dividend ETF (DVY) is down 5.4%, while the $20 billion SPDR S&P Dividend ETF (SDY) is down 3%. Some dividend ETFs have posted small gains, but overall, only $786 million has flowed into dividend ETFs this year, the smallest amount since 2006. Bond yields have presented a more reliable income stream than dividend funds, with ultra-short bond ETFs attracting $30 billion this year.