The SPDR Portfolio S&P 500 High Dividend ETF (
SPYD Quick Quote SPYD - Free Report) made its debut on 10/21/2015, 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?
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $5.16 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. This particular fund, before fees and expenses, 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 SPYD, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 4.96%.
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 18.50% of the portfolio. Utilities and Real Estate round out the top three.
Taking into account individual holdings, Comerica Incorporated (
CMA Quick Quote CMA - Free Report) accounts for about 1.58% of the fund's total assets, followed by Baker Hughes Company Class A ( BKR Quick Quote BKR - Free Report) and Regions Financial Corporation ( RF Quick Quote RF - Free Report) .
Its top 10 holdings account for approximately 15.02% of SPYD's total assets under management.
Performance and Risk
Year-to-date, the SPDR Portfolio S&P 500 High Dividend ETF has added roughly 30.72% so far, and is up about 35.43% over the last 12 months (as of 11/23/2021). SPYD has traded between $32.15 and $42.51 in this past 52-week period.
The fund has a beta of 1.09 and standard deviation of 28.49% 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.
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 Quick Quote IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $57.20 billion in assets, Vanguard Value ETF has $88.71 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.
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.