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Is ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL) a Strong ETF Right Now?

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The ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL - Free Report) made its debut on 02/03/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Mid 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.

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.

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 Proshares, and has been able to amass over $1.06 billion, which makes it one of the average sized ETFs in the Style Box - Mid Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the S&P MidCap 400 Dividend Aristocrats Index.

The S&P MidCap 400 Dividend Aristocrats Index targets companies that are currently members of the S&P MidCap 400 Index and have increased dividend payments each year for at least 15 years.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.41% for this ETF, which makes it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 2.42%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Financials sector - about 28.20% of the portfolio. Industrials and Utilities round out the top three.

When you look at individual holdings, Cullen/frost Bankers Inc (CFR - Free Report) accounts for about 2.36% of the fund's total assets, followed by Factset Research Systems Inc (FDS - Free Report) and Ryder System Inc (R - Free Report) .

The top 10 holdings account for about 22.02% of total assets under management.

Performance and Risk

Year-to-date, the ProShares S&P MidCap 400 Dividend Aristocrats ETF return is roughly 19.47% so far, and was up about 23.86% over the last 12 months (as of 11/22/2021). REGL has traded between $60.41 and $74.76 in this past 52-week period.

The fund has a beta of 0.89 and standard deviation of 24.76% for the trailing three-year period, which makes REGL a medium risk choice in this particular space. With about 54 holdings, it effectively diversifies company-specific risk.


ProShares S&P MidCap 400 Dividend Aristocrats ETF is a reasonable option for investors seeking to outperform the Style Box - Mid 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 $21.54 billion in assets, Vanguard Dividend Appreciation ETF has $66.03 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 - Mid 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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