Designed to provide broad exposure to the Total Market (U.S.) ETFs category of the market, the Global X SuperDividend U.S. ETF (DIV - Free Report) is a smart beta exchange traded fund launched on 03/11/2013.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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
The fund is managed by Global X Management, and has been able to amass over $502.11 M, which makes it one of the largest ETFs in the Total Market (U.S.) ETFs. Before fees and expenses, this particular fund 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.45%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 7.44%.
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, Compass Diversif accounts for about 2.62% of the fund's total assets, followed by Amerigas Partners-Lp and Usa Compression.
Its top 10 holdings account for approximately 24.14% of DIV's total assets under management.
Performance and Risk
The ETF has gained about 5.30% so far this year and is down about -3.44% in the last one year (as of 07/22/2019). In the past 52-week period, it has traded between $21.69 and $25.59.
DIV has a beta of 0.61 and standard deviation of 9.14% for the trailing three-year period, which makes the fund 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 $101.92 M in assets, Global X SuperDividend ETF has $960.06 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.