The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) was launched on 10/18/2012, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box – Large Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
There are some investors, though, who think it’s possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $3.87 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.
Operating expenses on an annual basis are 0.30% for SPHD, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.91%.
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.
For SPHD, it has heaviest allocation in the Real Estate sector –about 18% of the portfolio –while Utilities and Consumer Staples round out the top three.
Looking at individual holdings, Altria Group Inc (MO) accounts for about 3.28% of total assets, followed by Gilead Sciences Inc (GILD) and Kinder Morgan Inc (KMI).
Its top 10 holdings account for approximately 24.65% of SPHD’s total assets under management.
Performance and Risk
The ETF return is roughly 0.55% and was up about 2.41% so far this year and in the past one year (as of 02/24/2023), respectively. SPHD has traded between $39.01 and $49.24 during this last 52-week period.
The fund has a beta of 0.86 and standard deviation of 26.36% 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.
Invesco S&P 500 High Dividend Low Volatility ETF is an excellent option for investors seeking to outperform the Style Box – Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Russell 1000 Value ETF (IWD) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $52.25 billion in assets, Vanguard Value ETF has $102.40 billion. IWD has an expense ratio of 0.18% 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.
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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Invesco S&P 500 High Dividend Low Volatility ETF (SPHD): ETF Research Reports
Gilead Sciences, Inc. (GILD) : 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
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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