Full access to Entrepreneur for $5
Subscribe

Is ProShares Russell 2000 Dividend Growers ETF (SMDV) a Strong ETF Right Now?

Smart Beta ETF report for SMDV

By
This story originally appeared on Zacks

The ProShares Russell 2000 Dividend Growers ETF (SMDV) made its debut on 02/03/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Value category of the market.

- Zacks

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.

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.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 Proshares, and has been able to amass over $840.05 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Value. SMDV, before fees and expenses, seeks to match the performance of the Russell 2000 Dividend Growth Index.

The Russell 2000 Dividend Growth Index targets companies that are currently members of the Russell 2000 Index and have increased dividend payments each year for at least 10 years.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Annual operating expenses for SMDV are 0.41%, which makes it one of the more expensive products in the space.

It's 12-month trailing dividend yield comes in at 1.84%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

SMDV's heaviest allocation is in the Financials sector, which is about 30% of the portfolio. Its Utilities and Industrials round out the top three.

Looking at individual holdings, Cohen & Steers Inc (CNS) accounts for about 1.25% of total assets, followed by Lemaitre Vascular Inc (LMAT) and Ensign Group Inc/the (ENSG).

The top 10 holdings account for about 11.9% of total assets under management.

Performance and Risk

The ETF has added about 13.38% so far this year and it's up approximately 29.46% in the last one year (as of 08/24/2021). In the past 52-week period, it has traded between $45.53 and $68.31.

The fund has a beta of 0.78 and standard deviation of 27.70% for the trailing three-year period, which makes SMDV a medium risk choice in this particular space. With about 91 holdings, it effectively diversifies company-specific risk.

Alternatives

ProShares Russell 2000 Dividend Growers ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $20.61 billion in assets, Vanguard Dividend Appreciation ETF has $63.24 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.

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 - Small 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.



Tech IPOs With Massive Profit Potential

In the past few years, many popular platforms and like Uber and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names.

For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way…

If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November.

With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup could be even more lucrative.

See Zacks Hottest Tech IPOs Now >>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

ProShares Russell 2000 Dividend Growers ETF (SMDV): ETF Research Reports

 

Cohen & Steers Inc (CNS): Free Stock Analysis Report

 

LeMaitre Vascular, Inc. (LMAT): Free Stock Analysis Report

 

The Ensign Group, Inc. (ENSG): Free Stock Analysis Report

 

Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports

 

iShares Core Dividend Growth ETF (DGRO): ETF Research Reports

 

To read this article on Zacks.com click here.

 

Zacks Investment Research