Launched on 02/03/2015, the ProShares Russell 2000 Dividend Growers ETF (SMDV) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 sponsored by Proshares. It has amassed assets over $834.91 million, making it one of the average sized ETFs in the Style Box - Small Cap Value. SMDV seeks to match the performance of the Russell 2000 Dividend Growth Index before fees and expenses.
The Russell 2000 Dividend Growth Index targets companies that are currently members of the Russell 2000 Index and have increased dividend payments each year for at least 10 years.
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.
Operating expenses on an annual basis are 0.41% for SMDV, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.06%.
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 Financials sector - about 32% of the portfolio. Industrials and Utilities round out the top three.
Looking at individual holdings, Cohen & Steers Inc (CNS) accounts for about 1.25% of total assets, followed by Lemaitre Vascular Inc (NASDAQ:LMAT) and Ensign Group Inc/the (ENSG).
Its top 10 holdings account for approximately 11.9% of SMDV's total assets under management.
Performance and Risk
So far this year, SMDV has gained about 14.45%, and is up roughly 31.49% in the last one year (as of 10/15/2021). During this past 52-week period, the fund has traded between $48.97 and $68.31.
The ETF has a beta of 0.78 and standard deviation of 27.74% for the trailing three-year period, making it a medium risk choice in the space. With about 91 holdings, it effectively diversifies company-specific risk.
Alternatives
ProShares Russell 2000 Dividend Growers ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $20.41 billion in assets, Vanguard Dividend Appreciation ETF has $62.46 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 Style Box - Small 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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ProShares Russell 2000 Dividend Growers ETF (SMDV): ETF Research Reports
Cohen & Steers Inc (CNS): Free Stock Analysis Report
LeMaitre Vascular, Inc. (LMAT): Free Stock Analysis Report
The Ensign Group, Inc. (NASDAQ:ENSG): Free Stock Analysis Report
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
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