ETFs
Should the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) be on your investment radar?
Designed to provide broad exposure to the Large Cap Value segment of the U.S. stock market, the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) is a passively managed exchange-traded fund launched on 10/18/2012.
The fund is sponsored by Invesco. It has accumulated assets of more than $2.91 billion, making it one of the mid-cap ETFs that attempt to match the large-cap value segment of the U.S. stock market.
Why choose Large Cap Value
Large-cap companies typically have a market capitalization of more than $10 billion. Overall, they are generally a stable option, with less risk and more secure cash flows than mid- and small-cap companies.
Along with below-average price-to-earnings and price-to-book ratios, value stocks also have below-average sales and earnings growth rates. When it comes to long-term performance, value stocks have outperformed growth stocks in nearly every market; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
Since cheaper funds tend to perform better than more expensive funds, assuming all other factors remain equal, it’s important for investors to pay attention to an ETF’s expense ratio.
The annual operating expenses of this ETF are 0.30%, which puts it on par with most peer products in the sector.
Its 12-month rolling dividend yield is 4.20%.
Sector exposure and main holdings
While ETFs offer diversified exposure, which minimizes the risk associated with any one security, a thorough review of a fund’s holdings is a useful exercise. Additionally, most ETFs are highly transparent products that disclose their holdings daily.
This ETF is primarily dedicated to the utilities sector, which represents approximately 19.80% of the portfolio. Consumer staples and real estate round out the top three.
Looking at individual holdings, Altria Group Inc (MO) accounts for about 3.17% of total assets, followed by Kinder Morgan Inc (KMI) and At&t Inc (T).
The top 10 stocks represent approximately 27% of total assets under management.
Performance and risk
SPHD seeks to match the performance of the S&P 500 Low Volatility High Dividend Index before fees and expenses. The S&P 500 Low Volatility High Dividend Index includes 50 stocks traded on the S&P 500 Index that have historically provided high dividend yields and low volatility.
The ETF has gained about 5.89% year-to-date and is up about 10.38% over the past year (as of 07/08/2024). Over the past 52 weeks, it has traded between $37.32 and $45.43.
The ETF has a beta of 0.87 and a standard deviation of 14.72% over the past three years, making it a medium-risk pick in this sector. With around 52 stocks, it effectively diversifies company-specific risk.
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Alternatives
The Invesco S&P 500 High Dividend Low Volatility ETF is rated 3 (Hold) by Zacks ETF, which is based on the asset class’s expected return, expense ratio, and momentum, among other factors. Thus, SPHD is a sufficient option for those seeking exposure to the Style Box – Large Cap Value sector of the market. Investors may also want to consider other ETF options in this space.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While the iShares Russell 1000 Value ETF has $55.57 billion in assets, the Vanguard Value ETF has $115.69 billion. The IWD has an expense ratio of 0.19% and the VTV charges 0.04%.
Conclusion
While they are an excellent vehicle for long-term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility and tax efficiency.
To learn more about this and other ETFs, find products that match your investment goals, and read articles on the latest developments in the ETF investment universe, visit Zacks ETF Center.
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Invesco S&P 500 High Dividend Low Volatility ETF (SPHD): ETF Research Reports
AT&T Inc. (T): 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