The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) made its debut on 10/18/2012, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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 $3.53 billion, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. SPHD is managed by Invesco. SPHD, before fees and expenses, seeks to match the performance of the S&P 500 Low Volatility High Dividend Index.
The S&P 500 Low Volatility High Dividend Index comprises of 50 securities traded on the S&P 500 Index that historically have provided high dividend yields and low volatility.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.30%.
SPHD's 12-month trailing dividend yield is 3.30%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For SPHD, it has heaviest allocation in the Utilities sector --about 20% of the portfolio --while Consumer Staples and Healthcare round out the top three.
When you look at individual holdings, Altria Group Inc (MO) accounts for about 3.05% of the fund's total assets, followed by Bristol-Myers Squibb Co (BMY) and At&t Inc (T).
The top 10 holdings account for about 26.34% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 High Dividend Low Volatility ETF has gained about 23.51% so far, and was up about 33.03% over the last 12 months (as of 11/22/2024). SPHD has traded between $39.71 and $51.07 in this past 52-week period.
The fund has a beta of 0.87 and standard deviation of 14.59% for the trailing three-year period, which makes SPHD a medium risk choice in this particular space. With about 52 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 High Dividend Low Volatility ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $66.20 billion in assets, Vanguard Value ETF has $132.22 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
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 - Large 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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Get it free >>Invesco S&P 500 High Dividend Low Volatility ETF (SPHD): ETF Research Reports
AT&T Inc. (T) : Free Stock Analysis Report
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
Altria Group, Inc. (MO) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
Schwab U.S. Dividend Equity ETF (SCHD): 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.
