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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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
DIV is managed by Global X Management, and this fund has amassed over $449.65 M, which makes it one of the largest ETFs in the Total Market (U.S.) ETFs. This particular fund, 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.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.45%.
It's 12-month trailing dividend yield comes in at 7.20%.
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.
When you look at individual holdings, Amerigas Partners-Lp accounts for about 2.52% of the fund's total assets, followed by National Cinemedia Inc and Covanta Holding Corp.
Its top 10 holdings account for approximately 22.86% of DIV's total assets under management.
Performance and Risk
The ETF has gained about 5.19% and is up about 1.09% so far this year and in the past one year (as of 05/15/2019), respectively. DIV has traded between $21.69 and $25.59 during this last 52-week period.
The ETF has a beta of 0.59 and standard deviation of 9.16% 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.
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 $116.99 M in assets, Global X SuperDividend ETF has $906 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.