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Is SPDR Portfolio S&P 500 High Dividend ETF (SPYD) a Strong ETF Right Now?
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The SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) made its debut on 10/21/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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.
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 State Street Global Advisors, and has been able to amass over $6.39 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
SPYD's 12-month trailing dividend yield is 4.87%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
SPYD's heaviest allocation is in the Real Estate sector, which is about 23.20% of the portfolio. Its Financials and Utilities round out the top three.
Taking into account individual holdings, Iron Mountain Inc (IRM - Free Report) accounts for about 1.63% of the fund's total assets, followed by Darden Restaurants Inc (DRI - Free Report) and Nrg Energy Inc (NRG - Free Report) .
Its top 10 holdings account for approximately 15.58% of SPYD's total assets under management.
Performance and Risk
The ETF has lost about -5.53% and is down about -8.48% so far this year and in the past one year (as of 08/25/2023), respectively. SPYD has traded between $35.13 and $43.09 during this last 52-week period.
The ETF has a beta of 1 and standard deviation of 19.77% for the trailing three-year period, making it a medium risk choice in the space. With about 80 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.
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 $49.58 billion in assets, Vanguard Value ETF has $99.67 billion. IWD has an expense ratio of 0.19% 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?
The SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) made its debut on 10/21/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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.
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 State Street Global Advisors, and has been able to amass over $6.39 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
SPYD's 12-month trailing dividend yield is 4.87%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
SPYD's heaviest allocation is in the Real Estate sector, which is about 23.20% of the portfolio. Its Financials and Utilities round out the top three.
Taking into account individual holdings, Iron Mountain Inc (IRM - Free Report) accounts for about 1.63% of the fund's total assets, followed by Darden Restaurants Inc (DRI - Free Report) and Nrg Energy Inc (NRG - Free Report) .
Its top 10 holdings account for approximately 15.58% of SPYD's total assets under management.
Performance and Risk
The ETF has lost about -5.53% and is down about -8.48% so far this year and in the past one year (as of 08/25/2023), respectively. SPYD has traded between $35.13 and $43.09 during this last 52-week period.
The ETF has a beta of 1 and standard deviation of 19.77% for the trailing three-year period, making it a medium risk choice in the space. With about 80 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.
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 $49.58 billion in assets, Vanguard Value ETF has $99.67 billion. IWD has an expense ratio of 0.19% 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.