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Is Global X SuperDividend U.S. ETF (DIV) a Strong ETF Right Now?

Zacks Equity Research

The Global X SuperDividend U.S. ETF (DIV) was launched on 03/11/2013, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Value category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Managed by Global X Management, DIV has amassed assets over $577.15 M, making it one of the largest ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the INDXX SuperDividend U.S. Low Volatility Index before fees and expenses.

The INDXX SuperDividend US Low Volatility Index tracks the performance of 50 equally weighted common stocks, MLPs & REITs that rank among the highest dividend yielding equity securities in the US.

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.

Annual operating expenses for this ETF are 0.45%, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 7.54%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Compass Diversif accounts for about 3.22% of total assets, followed by Buckle Inc/the and Pattern Ener -A.

The top 10 holdings account for about 27.51% of total assets under management.

Performance and Risk

The ETF has added roughly 13.61% and was up about 18% so far this year and in the past one year (as of 12/25/2019), respectively. DIV has traded between $21.83 and $24.35 during this last 52-week period.

The fund has a beta of 0.60 and standard deviation of 9.15% for the trailing three-year period, which makes DIV a medium risk choice in this particular space. With about 49 holdings, it has more concentrated exposure than peers.

Alternatives

Global X SuperDividend U.S. ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

WBI Power Factor High Dividend ETF (WBIY) tracks Solactive Power Factor High Dividend Index and the Global X SuperDividend ETF (SDIV) tracks Solactive Global SuperDividend Index. WBI Power Factor High Dividend ETF has $96.48 M in assets, Global X SuperDividend ETF has $961.11 M. WBIY has an expense ratio of 0.70% and SDIV charges 0.58%.

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 - All Cap Value.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.


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Global X SuperDividend U.S. ETF (DIV): ETF Research Reports
 
Global X SuperDividend ETF (SDIV): ETF Research Reports
 
WBI Power Factor High Dividend ETF (WBIY): ETF Research Reports
 
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