Is the SPDR Portfolio S&P 500 High Dividend ETF (SPYD) a solid ETF right now?
MDebuting on 10/21/2015, the SPDR Portfolio S&P 500 High Dividend ETF (SPYD) Smart Beta Exchange Traded Fund (SPYD) offers investors 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 capitalization weighted indices, a strategy created to reflect the market or a particular market segment.
Investors who believe in the efficiency of the market should consider market capitalization indices, as they replicate market returns in an inexpensive, convenient and transparent manner.
If you are the type of investor who prefers to try and beat the market with good stock selection, then smart beta funds are your best bet; this fund class is known to follow unweighted capitalization strategies.
Uncap-weighted indices try to pick stocks that have a better chance of risk-return, based on specific fundamental characteristics or a mixture of other such characteristics.
The smart beta space offers investors many different choices, ranging from equal weighting, one of the simpler strategies, to more complex strategies like fundamental weighting and volatility / momentum. However, not all of these methodologies have been able to provide remarkable returns.
Fund promoter and index
The fund is sponsored by State Street Global Advisors. It has amassed over $ 4.67 billion in assets, making it one of the mid-size ETFs in the Style Box – Large Cap Value. This particular fund seeks to match the performance of the S&P 500 High Dividend Index before fees and expenses.
The S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend paying stocks listed on the S&P 500 Index, based on the dividend yield.
Cost and other expenses
When considering the total return of an ETF, expense ratios are an important factor. And, cheaper funds can dramatically outperform their more expensive cousins in the long run if all other factors remain equal.
Operating expenses on an annual basis are 0.07% for SPYD, making it one of the cheapest products in the space.
SPYD’s 12-month dividend yield is 4.81%.
Sector exposure and main titles
It is important to delve into the holdings of an ETF before investing despite the many advantages of these types of funds, such as diversified exposure, which minimizes the risk associated with individual stocks. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
SPYD’s largest allocation is in the finance sector, which represents approximately 22.80% of the portfolio. Its real estate and utilities round out the top three.
Taking into account individual holdings, Conocophillips (COP) represents approximately 1.62% of the fund’s total assets, followed by Seagate Technology Holdings Plc (STX) and Iron Mountain Inc. (IRM).
Its top 10 holdings represent approximately 15.17% of SPYD’s total assets under management.
Return and risk
So far this year, SPYD’s return is approximately 25.57%, and has increased by approximately 47.41% over the past year (as of 6/8/2021). Over the past 52 weeks the fund has traded between $ 26.58 and $ 42.51.
The fund has a beta of 1.12 and a standard deviation of 28.42% for the three year period, which makes SPYD a medium risk choice in this particular space. With around 79 participations, it effectively diversifies the risk specific to the company.
The SPDR Portfolio S&P 500 High Dividend ETF is a great option for investors looking to outperform the Style Box – Large Cap Value segment of the market. There are other ETFs in the space that investors might want to consider as well.
IShares Russell 1000 Value ETF (IWD) tracks the Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks the CRSP US Large Cap Value Index. IShares Russell 1000 Value ETF has $ 54.17 billion in assets, Vanguard Value ETF has $ 82.80 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Investors looking for cheaper and less risky options should consider traditional market capitalization weighted ETFs that aim to match the returns of the Style Box – Large Cap Value.
To learn more about this and other ETFs, search for products that match your investment goals, and read articles on the latest developments in the ETF investing world, please visit the Zacks ETF Center.
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SPDR Portfolio S&P 500 High Dividend ETF (SPYD): ETF Research Reports
ConocoPhillips (COP): Free Stock Analysis Report
Iron Mountain Incorporated (IRM): Free Stock Analysis Report
Seagate Technology Holdings PLC (STX): Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
IShares Russell 1000 Value ETF (IWD): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.