Should Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) Be on Your Investing Radar?
Designed to provide broad exposure to the Large Cap Value segment of the US equity 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 amassed assets over $3.84 billion, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
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 counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.30%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.62%.
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.
This ETF has heaviest allocation to the Utilities sector--about 19.90% of the portfolio. Consumer Staples and Real Estate round out the top three.
Looking at individual holdings, Altria Group Inc (MO) accounts for about 2.97% of total assets, followed by Crown Castle Inc (CCI) and Verizon Communications Inc (VZ).
The top 10 holdings account for about 26% 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 comprises of 50 securities traded on the S&P 500 Index that historically have provided high dividend yields and low volatility.
The ETF has gained about 19.47% so far this year and it's up approximately 26.09% in the last one year (as of 09/13/2024). In the past 52-week period, it has traded between $37.32 and $49.75.
The ETF has a beta of 0.87 and standard deviation of 14.71% for the trailing three-year period, making it a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 High Dividend Low Volatility ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SPHD is a reasonable option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $59.48 billion in assets, Vanguard Value ETF has $124.69 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Altria Group, Inc. (MO) : Free Stock Analysis Report
Crown Castle Inc. (CCI) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
Schwab U.S. Dividend Equity ETF (SCHD): ETF Research Reports