Is Global X SuperDividend U.S. ETF (DIV) a Strong ETF Right Now?

Zacks Equity Research
·4-min read

A smart beta exchange traded fund, the Global X SuperDividend U.S. ETF (DIV) debuted on 03/11/2013, and offers 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.

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.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Global X Management. DIV has been able to amass assets over $582.93 million, making it one of the largest ETFs in the Style Box - All Cap Value. Before fees and expenses, DIV 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

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Annual operating expenses for DIV are 0.46%, which makes it on par with most peer products in the space.

DIV's 12-month trailing dividend yield is 7.04%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Energy sector - about 24.10% of the portfolio. 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 (KHC) and General Mills Inc (GIS).

DIV's top 10 holdings account for about 34.48% of its total assets under management.

Performance and Risk

The ETF has gained about 9.55% so far this year and is down about -6.95% in the last one year (as of 03/03/2021). In the past 52-week period, it has traded between $11.17 and $20.98.

The ETF has a beta of 1.16 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 $47.74 million in assets, Global X SuperDividend ETF has $838.29 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.


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General Mills, Inc. (GIS) : Free Stock Analysis Report
 
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