Back to top

Image: Bigstock

Is ProShares S&P 500 Dividend Aristocrats ETF (NOBL) a Strong ETF Right Now?

Read MoreHide Full Article

The ProShares S&P 500 Dividend Aristocrats ETF (NOBL - Free Report) made its debut on 10/09/2013, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large 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 work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

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.

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

NOBL is managed by Proshares, and this fund has amassed over $9.47 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the S&P 500 DividendAristocrats Index.

The S&P 500 Dividend Aristocrats Index targets companies that are currently members of the S&P 500, have increased dividend payments each year for at least 25 years & meet certain market capitalization & liquidity requirements. It contains a minimum of 40 stocks, which are equally weighted, & no single sector comprises more than 30% of the index weight.

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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.

NOBL's 12-month trailing dividend yield is 1.84%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

For NOBL, it has heaviest allocation in the Industrials sector --about 19.80% of the portfolio --while Consumer Staples and Materials round out the top three.

Taking into account individual holdings, People's United Financial (PBCT - Free Report) accounts for about 1.86% of the fund's total assets, followed by Albemarle Corp (ALB - Free Report) and Archer-Daniels-Midland Co (ADM - Free Report) .

Its top 10 holdings account for approximately 17.28% of NOBL's total assets under management.

Performance and Risk

The ETF has gained about 23.46% and was up about 24.16% so far this year and in the past one year (as of 11/19/2021), respectively. NOBL has traded between $78.24 and $96.67 during this last 52-week period.

The ETF has a beta of 0.92 and standard deviation of 22.32% for the trailing three-year period, making it a medium risk choice in the space. With about 66 holdings, it effectively diversifies company-specific risk.

Alternatives

ProShares S&P 500 Dividend Aristocrats ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $21.64 billion in assets, Vanguard Dividend Appreciation ETF has $66.22 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.

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.

Published in