Launched on 10/18/2012, the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD Quick QuoteSPHD - 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 Invesco. It has amassed assets over $3.35 billion, making it one of the average sized 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. They tend to be stable companies with predictable cash flows and are usually less volatile 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. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

Costs

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 0.30%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 3.39%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Utilities sector--about 19.60% of the portfolio. Consumer Staples and Healthcare round out the top three.

Looking at individual holdings, Kinder Morgan Inc (KMI Quick QuoteKMI - Free Report) accounts for about 3.24% of total assets, followed by Bristol-Myers Squibb Co (BMY Quick QuoteBMY - Free Report) and Altria Group Inc (MO Quick QuoteMO - Free Report) .

The top 10 holdings account for about 27% of total assets under management.

Performance and Risk

SPHD 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.

The ETF has added about 0.41% so far this year and it's up approximately 18.41% in the last one year (as of 01/17/2025). In the past 52-week period, it has traded between $41.15 and $51.75.

The ETF has a beta of 0.87 and standard deviation of 14.54% for the trailing three-year period, making it 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SPHD is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

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 $67.35 billion in assets, Vanguard Value ETF has $131.75 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.