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Is Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) a Strong ETF Right Now?
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Making its debut on 10/18/2012, smart beta exchange traded fund Invesco S&P 500 High Dividend Low Volatility ETF (SPHD - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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
Because the fund has amassed over $2.79 billion, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. SPHD is managed by Invesco. This particular fund seeks to match the performance of the S&P 500 Low Volatility High Dividend Index before fees and expenses.
The S&P 500 Low Volatility High Dividend Index comprises of 50 securities traded on the S&P 500 Index that historically have provided high dividend yields and low volatility.
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.
Operating expenses on an annual basis are 0.30% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 4.92%.
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 SPHD, it has heaviest allocation in the Utilities sector --about 17.40% of the portfolio --while Real Estate and Consumer Staples round out the top three.
Looking at individual holdings, At&t Inc (T - Free Report) accounts for about 3.14% of total assets, followed by Altria Group Inc (MO - Free Report) and Verizon Communications Inc (VZ - Free Report) .
SPHD's top 10 holdings account for about 27.36% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 High Dividend Low Volatility ETF has lost about -10.41% so far, and is down about -7.97% over the last 12 months (as of 10/31/2023). SPHD has traded between $37.32 and $46.11 in this past 52-week period.
SPHD has a beta of 0.86 and standard deviation of 16.09% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 High Dividend Low Volatility 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.
Vanguard High Dividend Yield ETF (VYM - Free Report) tracks FTSE High Dividend Yield Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Vanguard High Dividend Yield ETF has $46.32 billion in assets, Vanguard Value ETF has $94.92 billion. VYM has an expense ratio of 0.06% 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.
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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Is Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) a Strong ETF Right Now?
Making its debut on 10/18/2012, smart beta exchange traded fund Invesco S&P 500 High Dividend Low Volatility ETF (SPHD - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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
Because the fund has amassed over $2.79 billion, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. SPHD is managed by Invesco. This particular fund seeks to match the performance of the S&P 500 Low Volatility High Dividend Index before fees and expenses.
The S&P 500 Low Volatility High Dividend Index comprises of 50 securities traded on the S&P 500 Index that historically have provided high dividend yields and low volatility.
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.
Operating expenses on an annual basis are 0.30% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 4.92%.
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 SPHD, it has heaviest allocation in the Utilities sector --about 17.40% of the portfolio --while Real Estate and Consumer Staples round out the top three.
Looking at individual holdings, At&t Inc (T - Free Report) accounts for about 3.14% of total assets, followed by Altria Group Inc (MO - Free Report) and Verizon Communications Inc (VZ - Free Report) .
SPHD's top 10 holdings account for about 27.36% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 High Dividend Low Volatility ETF has lost about -10.41% so far, and is down about -7.97% over the last 12 months (as of 10/31/2023). SPHD has traded between $37.32 and $46.11 in this past 52-week period.
SPHD has a beta of 0.86 and standard deviation of 16.09% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 High Dividend Low Volatility 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.
Vanguard High Dividend Yield ETF (VYM - Free Report) tracks FTSE High Dividend Yield Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Vanguard High Dividend Yield ETF has $46.32 billion in assets, Vanguard Value ETF has $94.92 billion. VYM has an expense ratio of 0.06% 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.
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.