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Is SPDR S&P Dividend ETF (SDY) a Strong ETF Right Now?
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The SPDR S&P Dividend ETF (SDY - Free Report) was launched on 11/08/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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
Managed by State Street Global Advisors, SDY has amassed assets over $20.68 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. SDY, before fees and expenses, seeks to match the performance of the S&P High Yield Dividend Aristocrats Index.
The S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.35% for SDY, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.66%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For SDY, it has heaviest allocation in the Industrials sector --about 22.70% of the portfolio --while Consumer Staples and Financials round out the top three.
Looking at individual holdings, 3m Co W/d (MMM - Free Report) accounts for about 2.83% of total assets, followed by Intl Business Machines Corp (IBM - Free Report) and Abbvie Inc (ABBV - Free Report) .
Its top 10 holdings account for approximately 22.01% of SDY's total assets under management.
Performance and Risk
So far this year, SDY has lost about -0.70%, and is up about 1.80% in the last one year (as of 01/08/2024). During this past 52-week period, the fund has traded between $110.20 and $132.18.
The ETF has a beta of 0.87 and standard deviation of 15.32% for the trailing three-year period, making it a medium risk choice in the space. With about 124 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 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 - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $54.50 billion in assets, Vanguard Value ETF has $106.19 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.
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 SPDR S&P Dividend ETF (SDY) a Strong ETF Right Now?
The SPDR S&P Dividend ETF (SDY - Free Report) was launched on 11/08/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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
Managed by State Street Global Advisors, SDY has amassed assets over $20.68 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. SDY, before fees and expenses, seeks to match the performance of the S&P High Yield Dividend Aristocrats Index.
The S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.35% for SDY, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.66%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For SDY, it has heaviest allocation in the Industrials sector --about 22.70% of the portfolio --while Consumer Staples and Financials round out the top three.
Looking at individual holdings, 3m Co W/d (MMM - Free Report) accounts for about 2.83% of total assets, followed by Intl Business Machines Corp (IBM - Free Report) and Abbvie Inc (ABBV - Free Report) .
Its top 10 holdings account for approximately 22.01% of SDY's total assets under management.
Performance and Risk
So far this year, SDY has lost about -0.70%, and is up about 1.80% in the last one year (as of 01/08/2024). During this past 52-week period, the fund has traded between $110.20 and $132.18.
The ETF has a beta of 0.87 and standard deviation of 15.32% for the trailing three-year period, making it a medium risk choice in the space. With about 124 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 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 - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $54.50 billion in assets, Vanguard Value ETF has $106.19 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.
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.