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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?
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Managed by State Street Global Advisors, SDY has amassed assets over $21.38 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund 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.
Annual operating expenses for SDY are 0.35%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.38%.
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.
This ETF has heaviest allocation in the Consumer Staples sector - about 18.90% of the portfolio. Industrials and Utilities round out the top three.
When you look at individual holdings, Realty Income Corp (O - Free Report) accounts for about 2.86% of the fund's total assets, followed by Kenvue Inc (KVUE - Free Report) and Intl Business Machines Corp (IBM - Free Report) .
SDY's top 10 holdings account for about 19.25% of its total assets under management.
Performance and Risk
The ETF has gained about 13.51% so far this year and is up about 19.51% in the last one year (as of 09/16/2024). In the past 52-week period, it has traded between $110.20 and $140.29.
The ETF has a beta of 0.86 and standard deviation of 14.68% for the trailing three-year period, making it a medium risk choice in the space. With about 136 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $60.01 billion in assets, Vanguard Value ETF has $125.50 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 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?
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Managed by State Street Global Advisors, SDY has amassed assets over $21.38 billion, making it one of the largest ETFs in the Style Box - Large Cap Value. This particular fund 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.
Annual operating expenses for SDY are 0.35%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.38%.
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.
This ETF has heaviest allocation in the Consumer Staples sector - about 18.90% of the portfolio. Industrials and Utilities round out the top three.
When you look at individual holdings, Realty Income Corp (O - Free Report) accounts for about 2.86% of the fund's total assets, followed by Kenvue Inc (KVUE - Free Report) and Intl Business Machines Corp (IBM - Free Report) .
SDY's top 10 holdings account for about 19.25% of its total assets under management.
Performance and Risk
The ETF has gained about 13.51% so far this year and is up about 19.51% in the last one year (as of 09/16/2024). In the past 52-week period, it has traded between $110.20 and $140.29.
The ETF has a beta of 0.86 and standard deviation of 14.68% for the trailing three-year period, making it a medium risk choice in the space. With about 136 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Dividend ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $60.01 billion in assets, Vanguard Value ETF has $125.50 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.