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Is SPDR Portfolio S&P 500 High Dividend ETF (SPYD) a Strong ETF Right Now?
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Making its debut on 10/21/2015, smart beta exchange traded fund SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
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.
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.
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
SPYD is managed by State Street Global Advisors, and this fund has amassed over $7.08 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 High Dividend Index.
The S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.07% for this ETF, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 4%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For SPYD, it has heaviest allocation in the Real Estate sector --about 23.60% of the portfolio --while Financials and Utilities round out the top three.
Taking into account individual holdings, Kellanova (K - Free Report) accounts for about 1.65% of the fund's total assets, followed by Entergy Corp (ETR - Free Report) and Kenvue Inc (KVUE - Free Report) .
Its top 10 holdings account for approximately 14.53% of SPYD's total assets under management.
Performance and Risk
Year-to-date, the SPDR Portfolio S&P 500 High Dividend ETF has added roughly 21.38% so far, and is up about 28.78% over the last 12 months (as of 12/06/2024). SPYD has traded between $37.60 and $47.32 in this past 52-week period.
The ETF has a beta of 1.02 and standard deviation of 16.69% for the trailing three-year period, making it a medium risk choice in the space. With about 83 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR Portfolio S&P 500 High Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $66.98 billion in assets, Vanguard Value ETF has $133.73 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
Bottom Line
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.
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Is SPDR Portfolio S&P 500 High Dividend ETF (SPYD) a Strong ETF Right Now?
Making its debut on 10/21/2015, smart beta exchange traded fund SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the market.
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.
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.
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
SPYD is managed by State Street Global Advisors, and this fund has amassed over $7.08 billion, which makes it one of the larger ETFs in the Style Box - Large Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 High Dividend Index.
The S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.07% for this ETF, which makes it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 4%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For SPYD, it has heaviest allocation in the Real Estate sector --about 23.60% of the portfolio --while Financials and Utilities round out the top three.
Taking into account individual holdings, Kellanova (K - Free Report) accounts for about 1.65% of the fund's total assets, followed by Entergy Corp (ETR - Free Report) and Kenvue Inc (KVUE - Free Report) .
Its top 10 holdings account for approximately 14.53% of SPYD's total assets under management.
Performance and Risk
Year-to-date, the SPDR Portfolio S&P 500 High Dividend ETF has added roughly 21.38% so far, and is up about 28.78% over the last 12 months (as of 12/06/2024). SPYD has traded between $37.60 and $47.32 in this past 52-week period.
The ETF has a beta of 1.02 and standard deviation of 16.69% for the trailing three-year period, making it a medium risk choice in the space. With about 83 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR Portfolio S&P 500 High Dividend ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $66.98 billion in assets, Vanguard Value ETF has $133.73 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.
Bottom Line
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.