September 11, 2008 at 2:00 pm by Tom Lydon
Dividend-focused exchange traded funds (ETFs) usually get torn up pretty bad after a bear attack, however, there are some funds that have beat the odds.
Since financial companies usually dominate dividend-paying companies, it is only natural they faltered during the recent housing/credit crisis.
Gary Gordon for ETFExpert says financial stock prices lost 40% of their value (Lehman Bros. (LEH) lost that in one day!) and dividend funds shed 20% of their value.
Some funds managed to withstand the beating, though:
- Vanguard Dividend Appreciation (VIG): down 7% year-to-date vs. the S&P 500, which is down 14.7%. The Dividend Achievers Index is tracked and these companies tend to increase dividends over time. Low allocation to financials (11%) and telecom (4%) has kept this ETF afloat. Yields 2% annually.
- WisomTree Small Cap Dividend Fund (DES): down 3.6% year-to-date; Small-caps have outperformed their larger competitors, and this has helped DES. You are getting paid to own great companies for the long haul, but beware of the small bank exposure.
- Eaton Vance Risk-Managed Diversified Equity Income Fund (ETJ): Up 0.6% year-to-date. Diversification, income stream and risk management are three pluses right in the title. This is actually a closed-end fund (CEF), but the 10% payout on a quarterly basis make this ETF worth owning an income-focused fund.
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