Making its debut on 03/11/2013, smart beta exchange traded fund Global X SuperDividend U.S. ETF (DIV) provides investors broad exposure to the Total Market (U.S.) ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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 $420.19 M, making it one of the larger ETFs in the Total Market (U.S.) ETFs. This particular fund, before fees and expenses, seeks to match the performance of the INDXX SuperDividend U.S. Low Volatility Index.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.45% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 6.30%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Taking into account individual holdings, Annaly Capital Management accounts for about 3.14% of the fund's total assets, followed by Amc Entertainment Hlds-Cl and Brinker International Inc.
DIV's top 10 holdings account for about 26.33% of its total assets under management.
Performance and Risk
The ETF has gained about 1.97% so far this year and was up about 5.66% in the last one year (as of 11/09/2018). In the past 52-week period, it has traded between $23.53 and $25.83.
The ETF has a beta of 0.49 and standard deviation of 9.95% for the trailing three-year period, making it a medium risk choice in the 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 $122.73 M in assets, Global X SuperDividend ETF has $930.23 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.
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GLBL-X SPRDV US (DIV): ETF Research Reports
GLBL-X SUPERDIV (SDIV): ETF Research Reports
WBI-PWR FAC HD (WBIY): ETF Research Reports
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