Making its debut on 10/18/2012, smart beta exchange traded fund Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) provides investors 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $3.39 billion, making it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, SPHD 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
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.
Annual operating expenses for this ETF are 0.30%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.32%.
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.
SPHD's heaviest allocation is in the Utilities sector, which is about 19.90% of the portfolio. Its Consumer Staples and Healthcare round out the top three.
Taking into account individual holdings, Kinder Morgan Inc (KMI) accounts for about 3.24% of the fund's total assets, followed by Bristol-Myers Squibb Co (BMY) and Altria Group Inc (MO).
The top 10 holdings account for about 27% of total assets under management.
Performance and Risk
The ETF has gained about 1.86% so far this year and was up about 21.20% in the last one year (as of 01/22/2025). In the past 52-week period, it has traded between $41.15 and $51.75.
SPHD has a beta of 0.87 and standard deviation of 14.53% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 51 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 $68.36 billion in assets, Vanguard Value ETF has $134.07 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
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
Altria Group, Inc. (MO) : Free Stock Analysis Report
Kinder Morgan, Inc. (KMI) : 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.
