Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the SPDR Portfolio S&P 500 High Dividend ETF (
SPYD Quick Quote SPYD - Free Report) is a passively managed exchange traded fund launched on 10/21/2015.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $5.88 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
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 counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 5.36%.
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.
This ETF has heaviest allocation to the Financials sector--about 21.10% of the portfolio. Real Estate and Utilities round out the top three.
Looking at individual holdings, Amgen Inc (
AMGN Quick Quote AMGN - Free Report) accounts for about 1.70% of total assets, followed by Seagate Technology Holdings ( STX Quick Quote STX - Free Report) and Packaging Corp Of America ( PKG Quick Quote PKG - Free Report) .
The top 10 holdings account for about 15.18% of total assets under management.
Performance and Risk
SPYD seeks to match the performance of the S&P 500 High Dividend Index before fees and expenses. 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.
The ETF has lost about -11.92% so far this year and is down about -9.37% in the last one year (as of 11/01/2023). In the past 52-week period, it has traded between $33 and $43.09.
The ETF has a beta of 1 and standard deviation of 19.22% for the trailing three-year period, making it a medium risk choice in the space. With about 82 holdings, it effectively diversifies company-specific risk.
SPDR Portfolio S&P 500 High Dividend ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPYD is a great option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard High Dividend Yield ETF (
VYM Quick Quote VYM - Free Report) and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) track a similar index. While Vanguard High Dividend Yield ETF has $46.57 billion in assets, Vanguard Value ETF has $95.63 billion. VYM has an expense ratio of 0.06% and VTV charges 0.04%. Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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.