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Is ProShares S&P Technology Dividend Aristocrats ETF (TDV) a Strong ETF Right Now?

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A smart beta exchange traded fund, the ProShares S&P Technology Dividend Aristocrats ETF (TDV - Free Report) debuted on 11/05/2019, and offers broad exposure to the Technology ETFs 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.

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.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

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.

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

The fund is managed by Proshares, and has been able to amass over $266.66 million, which makes it one of the average sized ETFs in the Technology ETFs. TDV seeks to match the performance of the S&P TECHNOLOGY DIVIDEND ARISTOCRATS INDX before fees and expenses.

The S&P Technology Dividend Aristocrats Index targets companies from information technology, internet and direct marketing retail, interactive home entertainment, and interactive media and services segments of the economy.

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 TDV are 0.45%, which makes it on par with most peer products in the space.

TDV's 12-month trailing dividend yield is 1.16%.

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.

For TDV, it has heaviest allocation in the Information Technology sector --about 77.20% of the portfolio --while Financials and Industrials round out the top three.

Looking at individual holdings, Oracle Corp (ORCL - Free Report) accounts for about 3.44% of total assets, followed by Intl Business Machines Corp (IBM - Free Report) and Motorola Solutions Inc (MSI - Free Report) .

Its top 10 holdings account for approximately 28.99% of TDV's total assets under management.

Performance and Risk

The ETF return is roughly 11.71% so far this year and is up about 29.45% in the last one year (as of 10/22/2024). In the past 52-week period, it has traded between $58.71 and $79.20.

TDV has a beta of 1.05 and standard deviation of 20.37% for the trailing three-year period. With about 36 holdings, it has more concentrated exposure than peers.

Alternatives

ProShares S&P Technology Dividend Aristocrats ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

IShares Core Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $30.45 billion in assets, Vanguard Dividend Appreciation ETF has $86.88 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.

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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