The Global X SuperDividend U.S. ETF (DIV - Free Report) made its debut on 03/11/2013, and is a smart beta exchange traded fund that provides broad exposure to the Total Market (U.S.) ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Managed by Global X Management, DIV has amassed assets over $427.63 M, making it one of the largest ETFs in the Total Market (U.S.) ETFs. DIV, before fees and expenses, seeks to match the performance of the INDXX SuperDividend U.S. Low Volatility Index.
The INDXX SuperDividend US Low Volatility Index tracks the performance of 50 equally weighted common stocks, MLPs & REITs that rank among the highest dividend yielding equity securities in the US.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.45% for DIV, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 6.76%.
Sector Exposure and Top Holdings
ETFs offer 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.
When you look at individual holdings, Annaly Capital Management accounts for about 3.38% of the fund's total assets, followed by Aes Corp and Brinker International Inc.
The top 10 holdings account for about 26.43% of total assets under management.
Performance and Risk
So far this year, DIV return is roughly 7.21%, and was up about 4.50% in the last one year (as of 03/06/2019). During this past 52-week period, the fund has traded between $21.69 and $25.59.
The fund has a beta of 0.60 and standard deviation of 9.16% for the trailing three-year period, which makes DIV a medium risk choice in this particular space. With about 53 holdings, it effectively diversifies company-specific risk.
Global X SuperDividend U.S. ETF is a reasonable option for investors seeking to outperform the Total Market (U.S.) ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
WBI Power Factor High Dividend ETF (WBIY - Free Report) tracks Solactive Power Factor High Dividend Index and the Global X SuperDividend ETF (SDIV - Free Report) tracks Solactive Global SuperDividend Index. WBI Power Factor High Dividend ETF has $91.80 M in assets, Global X SuperDividend ETF has $908.96 M. WBIY has an expense ratio of 0.70% and SDIV charges 0.58%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Total Market (U.S.) ETFs.
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.