The Global X SuperDividend U.S. ETF (DIV) made its debut on 03/11/2013, and is a smart beta exchange traded fund that provides broad exposure to the Style Box – All 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.
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.
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.
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.
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 Global X Management, and has been able to amass over $423.42 million, which makes it one of the larger ETFs in the Style Box – All Cap Value. This particular fund, before fees and expenses, 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
When considering an ETF’s total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.46% for DIV, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 11%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund’s holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
DIV’s heaviest allocation is in the Consumer Staples sector, which is about 24.60% of the portfolio. Its Energy and Financials round out the top three.
Looking at individual holdings, B&g Foods Inc (BGS) accounts for about 6.48% of total assets, followed by Kraft Heinz Co/the (KHC) and Delek Logistics (DKL).
DIV’s top 10 holdings account for about 33.79% of its total assets under management.
Performance and Risk
The ETF has lost about -29.97% so far this year and is down about -22.87% in the last one year (as of 09/04/2020). In the past 52-week period, it has traded between $11.17 and $23.98.
The ETF has a beta of 1.14 and standard deviation of 25.94% for the trailing three-year period, making it a medium risk choice in the space. With about 45 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 $41.71 million in assets, Global X SuperDividend ETF has $639.29 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.
Global X SuperDividend U.S. ETF (DIV): ETF Research Reports
BG Foods, Inc. (BGS): Free Stock Analysis Report
Delek Logistics Partners, L.P. (DKL): Free Stock Analysis Report
Global X SuperDividend ETF (SDIV): ETF Research Reports
The Kraft Heinz Company (KHC): Free Stock Analysis Report
WBI Power Factor High Dividend ETF (WBIY): 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.
