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

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Launched on 03/11/2013, the Global X SuperDividend U.S. ETF (DIV - Free Report) is a smart beta exchange traded fund offering broad exposure to the Total Market (U.S.) ETFs category of the U.S. equity market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

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

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.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Global X Management, and has been able to amass over $408.26 M, which makes it one of the average sized ETFs in the Total Market (U.S.) ETFs. 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

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.

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

It has a 12-month trailing dividend yield of 6.01%.

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.

Looking at individual holdings, Brinker International Inc accounts for about 2.74% of total assets, followed by Universal Corp/va and Mtge Investment Corp.

The top 10 holdings account for about 23.12% of total assets under management.

Performance and Risk

So far this year, the ETF has added roughly 0.02%, and it's up approximately 2.52% in the last one year (as of 06/20/2018). DIV has traded between $23.53 and $25.83 in the past 52-week period.

DIV has a beta of 0.57 and standard deviation of 10.94% for the trailing three-year period, which makes the fund a medium choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.

Alternatives

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 - Free Report) tracks Solactive Power Factor High Dividend Index and the Global X SuperDividend ETF (SDIV - Free Report) tracks Solactive Global SuperDividend Index. WBI Power Factor High Dividend ETF has $47.19 M in assets, Global X SuperDividend ETF has $1.09 B. 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.

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.