Designed to provide broad exposure to the Total Market (U.S.) ETFs category of the market, the Global X SuperDividend U.S. ETF (DIV) is a smart beta exchange traded fund launched on 03/11/2013.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Global X Management. DIV has been able to amass assets over $404.69 M, making it one of the largest ETFs in the Total Market (U.S.) ETFs. DIV 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.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.45%.
It's 12-month trailing dividend yield comes in at 6.76%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Annaly Capital Management accounts for about 3.48% of the fund's total assets, followed by Brinker International Inc and Pfizer Inc.
The top 10 holdings account for about 26.82% of total assets under management.
Performance and Risk
The ETF return is roughly 4.69% so far this year and is down about -1.16% in the last one year (as of 01/16/2019). In the past 52-week period, it has traded between $21.69 and $25.59.
The fund has a beta of 0.55 and standard deviation of 9.95% 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.
Global X SuperDividend U.S. ETF is a reasonable option for investors seeking to outperform the Total Market (U.S.) ETFs 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 $90.10 M in assets, Global X SuperDividend ETF has $887.84 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 Total Market (U.S.) ETFs.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Zacks Investment Research