In another sign of the ongoing popularity of dividend exchange traded funds, the WisdomTree U.S. Dividend Growth Fund (DGRW) reached $100 million in assets under management in just nine months of trading.
DGRW, which debuted in late May 2013, had almost $100.6 million in assets as of Feb. 28, according to WisdomTree data.
ETFs offering exposure to stocks with lengthy track records of boosting payouts have proven wildly popular with investors. The Vanguard Dividend Appreciation ETF (VIG) and the SPDR S&P Dividend ETF (SDY) are two of the largest dividend ETFs. VIG only holds companies that have raised dividends every year for a decade while SDY’s requirement is a more strict 25 years of increased dividends.
The ProShares S&P 500 Aristocrats ETF (NOBL) also requires 25 consecutive years of higher payouts and ProShares recently said the ETF went over $100 million after an October 2013 debut. [Dividend Aristocrats ETF Hits $100M in AUM]
DGRW takes a different, more forward-looking approach to dividend growth. Rather than focusing on what constituent companies have previously done with their dividends or dividend increase streaks, DGRW’s nearly 300 holdings are screened on a combination of growth and value factors and then weighted by projected cash payouts for the coming year.
Importantly, DGRW is heavily allocated to sectors that are expected to sources of future dividend growth. For example, technology is the ETF’s largest sector weight at 20.3%. While technology has been one of the largest contributors to S&P 500 dividend growth over the past few years, ETFs focusing on length of dividend increase streaks do not feature large weights to the sector because many tech firms have only recently started showing noteworthy commitments to higher dividends. [Dividend Growth With ETFs]
Notably, almost 55% of the fund’s weight is allocated the technology, industrial and consumer discretionary sectors, three of the best-performing sectors when U.S. interest rates rise. [Some Dividend ETFs Stand Tall as Rates Rise]
WisdomTree U.S. Dividend Growth Fund Sector Weights
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of Apple.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
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