Launched on 10/21/2015, the SPDR Portfolio S&P 500 High Dividend ETF (SPYD Quick QuoteSPYD - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

The fund is sponsored by State Street Global Advisors. It has amassed assets over $6.72 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

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks 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.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 3.04%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Real Estate sector--about 24.90% of the portfolio. Utilities and Financials round out the top three.

Looking at individual holdings, Kellanova (K Quick QuoteK - Free Report) accounts for about 1.60% of total assets, followed by Kenvue Inc (KVUE Quick QuoteKVUE - Free Report) and Ventas Inc (VTR Quick QuoteVTR - Free Report) .

The top 10 holdings account for about 13.62% 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 return is roughly 19.06% so far this year and was up about 30.08% in the last one year (as of 09/17/2024). In the past 52-week period, it has traded between $33 and $45.80.

The ETF has a beta of 1.02 and standard deviation of 17.05% for the trailing three-year period, making it a medium risk choice in the space. With about 83 holdings, it effectively diversifies company-specific risk.

Alternatives

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 an outstanding 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 Schwab U.S. Dividend Equity ETF (SCHD Quick QuoteSCHD - Free Report) and the Vanguard Value ETF (VTV Quick QuoteVTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $60.60 billion in assets, Vanguard Value ETF has $126.51 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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.