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Is SPDR S&P Dividend ETF (SDY) a Strong ETF Right Now?
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The SPDR S&P Dividend ETF (SDY - Free Report) was launched on 11/08/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by State Street Global Advisors, SDY has amassed assets over $22.84 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. SDY seeks to match the performance of the S&P High Yield Dividend Aristocrats Index before fees and expenses.
The S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.
SDY's 12-month trailing dividend yield is 2.53%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For SDY, it has heaviest allocation in the Industrials sector --about 19.90% of the portfolio --while Consumer Staples and Financials round out the top three.
Taking into account individual holdings, Walgreens Boots Alliance Inc. (WBA - Free Report) accounts for about 2.18% of the fund's total assets, followed by V.f. Corporation (VFC - Free Report) and National Retail Properties Inc. (NNN - Free Report) .
SDY's top 10 holdings account for about 16.77% of its total assets under management.
Performance and Risk
So far this year, SDY has lost about -0.48%, and is down about -1.97% in the last one year (as of 04/04/2023). During this past 52-week period, the fund has traded between $111.50 and $132.34.
SDY has a beta of 0.86 and standard deviation of 19.69% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 122 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 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.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $50.83 billion in assets, Vanguard Value ETF has $101.98 billion. IWD has an expense ratio of 0.18% 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 S&P Dividend ETF (SDY) a Strong ETF Right Now?
The SPDR S&P Dividend ETF (SDY - Free Report) was launched on 11/08/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by State Street Global Advisors, SDY has amassed assets over $22.84 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. SDY seeks to match the performance of the S&P High Yield Dividend Aristocrats Index before fees and expenses.
The S&P High Yield Dividend Aristocrats Index measures the performance of the highest dividend yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.
SDY's 12-month trailing dividend yield is 2.53%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For SDY, it has heaviest allocation in the Industrials sector --about 19.90% of the portfolio --while Consumer Staples and Financials round out the top three.
Taking into account individual holdings, Walgreens Boots Alliance Inc. (WBA - Free Report) accounts for about 2.18% of the fund's total assets, followed by V.f. Corporation (VFC - Free Report) and National Retail Properties Inc. (NNN - Free Report) .
SDY's top 10 holdings account for about 16.77% of its total assets under management.
Performance and Risk
So far this year, SDY has lost about -0.48%, and is down about -1.97% in the last one year (as of 04/04/2023). During this past 52-week period, the fund has traded between $111.50 and $132.34.
SDY has a beta of 0.86 and standard deviation of 19.69% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 122 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 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.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $50.83 billion in assets, Vanguard Value ETF has $101.98 billion. IWD has an expense ratio of 0.18% 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.