Making its debut on 06/28/2013, smart beta exchange traded fund ALPS International Sector Dividend Dogs ETF (IDOG) provides investors broad exposure to the Broad Developed World 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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Alps, IDOG has amassed assets over $228.75 M, making it one of the average sized ETFs in the Broad Developed World ETFs. IDOG, before fees and expenses, seeks to match the performance of the S-Network International Sector Dividend Dogs Index.
S-Network International Sector Dividend Dogs Index identifies five high yielding securities, based on regular cash dividends, in each of the ten Global Industry Classification Standard sectors and is rebalanced quarterly.
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 on par with most peer products in the space, this ETF has annual operating expenses of 0.50%.
IDOG's 12-month trailing dividend yield is 5.43%.
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, Ln Sse Plc accounts for about 2.46% of the fund's total assets, followed by Ln Bt Group Plc (BT/A) and Jp Takeda Pharmaceutical Co. Ltd.
Its top 10 holdings account for approximately 22.4% of IDOG's total assets under management.
Performance and Risk
Year-to-date, the ALPS International Sector Dividend Dogs ETF has added about 21.25% so far, and is up about 21.59% over the last 12 months (as of 12/31/2019). IDOG has traded between $23.68 and $27.97 in this past 52-week period.
The ETF has a beta of 0.80 and standard deviation of 11.76% 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.
ALPS International Sector Dividend Dogs ETF is not a suitable option for investors seeking to outperform the Broad Developed World ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard FTSE All-World ex-US ETF (VEU) tracks FTSE All-World ex US Index and the Vanguard FTSE Developed Markets ETF (VEA) tracks FTSE Developed All Cap ex US Index. Vanguard FTSE All-World ex-US ETF has $25.63 B in assets, Vanguard FTSE Developed Markets ETF has $77.20 B. VEU has an expense ratio of 0.09% and VEA charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Developed World 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.