Launched on 03/11/2013, the Global X SuperDividend U.S. ETF (DIV) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $556.93 million, this makes it one of the largest ETFs in the Style Box - All Cap Value. DIV is managed by Global X Management. Before fees and expenses, this particular fund seeks to match the performance of the INDXX SuperDividend U.S. Low Volatility Index.
The INDXX SuperDividend US Low Volatility Index tracks the performance of 50 equally weighted common stocks, MLPs & REITs that rank among the highest dividend yielding equity securities in the US.
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.46%.
It's 12-month trailing dividend yield comes in at 7.08%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For DIV, it has heaviest allocation in the Energy sector --about 24.20% of the portfolio --while Consumer Staples and Financials round out the top three.
Looking at individual holdings, B&g Foods Inc (BGS) accounts for about 7.02% of total assets, followed by Kraft Heinz Co/the (NASDAQ:KHC) and General Mills Inc (NYSE:GIS).
Its top 10 holdings account for approximately 34.48% of DIV's total assets under management.
Performance and Risk
The ETF has gained about 8.96% and is down about -15.32% so far this year and in the past one year (as of 02/09/2021), respectively. DIV has traded between $11.17 and $23.26 during this last 52-week period.
The ETF has a beta of 1.15 and standard deviation of 26.69% for the trailing three-year period, making it a medium risk choice in the space. With about 48 holdings, it has more concentrated exposure than peers.
Alternatives
Global X SuperDividend U.S. ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
WBI Power Factor High Dividend ETF (WBIY) tracks Solactive Power Factor High Dividend Index and the Global X SuperDividend ETF (SDIV) tracks Solactive Global SuperDividend Index. WBI Power Factor High Dividend ETF has $46 million in assets, Global X SuperDividend ETF has $792.99 million. WBIY has an expense ratio of 0.70% and SDIV charges 0.59%.
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 - All 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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