Designed to provide broad exposure to the Style Box - Mid Cap Value category of the market, the ProShares S&P MidCap 400 Dividend Aristocrats ETF (
REGL Quick Quote REGL - Free Report) is a smart beta exchange traded fund launched on 02/03/2015. 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.
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.
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
The fund is managed by Proshares. REGL has been able to amass assets over $1.15 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Value. Before fees and expenses, REGL 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.40% for REGL, making it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 2.49%.
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.
Representing 27% of the portfolio, the fund has heaviest allocation to the Financials sector; Utilities and Industrials round out the top three.
Taking into account individual holdings, Perrigo Co Plc (
PRGO Quick Quote PRGO - Free Report) accounts for about 2.66% of the fund's total assets, followed by Ugi Corp ( UGI Quick Quote UGI - Free Report) and Prosperity Bancshares Inc ( PB Quick Quote PB - Free Report) .
The top 10 holdings account for about 23.11% of total assets under management.
Performance and Risk
The ETF has lost about -2.43% and is up roughly 2.55% so far this year and in the past one year (as of 08/05/2022), respectively. REGL has traded between $65.10 and $74.12 during this last 52-week period.
The ETF has a beta of 0.83 and standard deviation of 25.54% for the trailing three-year period, making it a medium risk choice in the space. With about 49 holdings, it has more concentrated exposure than peers.
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 Quick Quote DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF ( VIG Quick Quote VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $23.67 billion in assets, Vanguard Dividend Appreciation ETF has $63.89 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.
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.