Is Global X SuperDividend U.S. ETF (DIV) a Strong ETF Right Now?
Zacks Investment Research | Nov 11, 2020 06:20AM ET
Designed to provide broad exposure to the Style Box - All Cap Value category of the market, the Global X SuperDividend U.S. ETF (DIV) is a smart beta exchange traded fund launched on 03/11/2013.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
DIV is managed by Global X Management, and this fund has amassed over $440.90 million, which makes it one of the larger ETFs in the Style Box - All Cap Value. Before fees and expenses, this particular fund 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.46%.
DIV's 12-month trailing dividend yield is 9.06%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For DIV, it has heaviest allocation in the Consumer Staples sector --about 24.40% of the portfolio --while Energy and Financials round out the top three.
Taking into account individual holdings, B&g Foods Inc (BGS) accounts for about 7.02% of the fund's total assets, followed by Kraft Heinz Co/the (NASDAQ:KHC) and General Mills Inc (NYSE:GIS).
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The top 10 holdings account for about 34.48% of total assets under management.
Performance and Risk
The ETF has lost about -27.09% so far this year and is down about -24.89% in the last one year (as of 11/11/2020). 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 26.46% 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 $42.92 million in assets, Global X SuperDividend ETF has $700.92 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 To read this article on Zacks.com click here.
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