Back to top

Image: Bigstock

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

Read MoreHide Full Article

Making its debut on 03/11/2013, smart beta exchange traded fund Global X SuperDividend U.S. ETF (DIV - Free Report) provides investors broad exposure to the Style Box - All Cap Value category of the 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.

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.

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.

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 $526.28 M, making it one of the largest ETFs in the Style Box - All Cap Value. 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

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

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

DIV's 12-month trailing dividend yield is 7.34%.

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.

When you look at individual holdings, Pattern Ener -A accounts for about 2.78% of the fund's total assets, followed by National Cinemedia Inc and Southern Co/the.

Its top 10 holdings account for approximately 25.03% of DIV's total assets under management.

Performance and Risk

The ETF has added about 10.62% and is up roughly 0.29% so far this year and in the past one year (as of 09/26/2019), respectively. DIV has traded between $21.69 and $25.33 during this last 52-week period.

DIV has a beta of 0.60 and standard deviation of 9.31% for the trailing three-year period, which makes the fund a medium risk choice in the 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 - 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 $95.72 M in assets, Global X SuperDividend ETF has $924.19 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.

Published in