Is ProShares Russell 2000 Dividend Growers ETF (SMDV) a Strong ETF Right Now?
Smart Beta ETF report for SMDV
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.
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.
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.
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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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
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