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Is SPDR Portfolio S&P 500 High Dividend ETF (SPYD) a Strong ETF Right Now?

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Launched on 10/21/2015, the SPDR Portfolio S&P 500 High Dividend ETF (SPYD) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

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

Because the fund has amassed over $5.42 billion, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. SPYD is managed by State Street Global Advisors. Before fees and expenses, SPYD seeks to match the performance of the S&P 500 High Dividend Index.

The S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Operating expenses on an annual basis are 0.07% for this ETF, which makes it one of the least expensive products in the space.

It's 12-month trailing dividend yield comes in at 3.68%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

This ETF has heaviest allocation in the Utilities sector - about 17.80% of the portfolio. Financials and Real Estate round out the top three.

Looking at individual holdings, Comerica Incorporated (CMA) accounts for about 1.58% of total assets, followed by Baker Hughes Company Class A (BKR) and Regions Financial Corporation (RF).

Its top 10 holdings account for approximately 15.02% of SPYD's total assets under management.

Performance and Risk

So far this year, SPYD has lost about -0.75%, and is up roughly 25.81% in the last one year (as of 01/27/2022). During this past 52-week period, the fund has traded between $33.59 and $44.20.

The fund has a beta of 1.10 and standard deviation of 28.39% for the trailing three-year period, which makes SPYD a medium risk choice in this particular space. With about 81 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR Portfolio S&P 500 High Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

IShares Russell 1000 Value ETF (IWD) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $56.30 billion in assets, Vanguard Value ETF has $89.99 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

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 - Large 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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SPDR Portfolio S&P 500 High Dividend ETF (SPYD): ETF Research Reports
 
Regions Financial Corporation (RF) : Free Stock Analysis Report
 
Comerica Incorporated (CMA) : Free Stock Analysis Report
 
Baker Hughes Company (BKR) : Free Stock Analysis Report
 
Vanguard Value ETF (VTV): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
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Zacks Investment Research