LVL’s U.S.-based holdings are not free of rate risk, though, as many are rate-sensitive real estate investment trusts (REITs). Some of the REITs found in LVL are mortgage REITs, which were smacked by soaring Treasury yields last year.
Investors should pay close attention to the sectors that dividend ETFs track. This can help avoid over or under exposure to various stocks and can help investors dodge volatility. For example, many dividend funds invest about 20% of their assets in the financial services sector, though in the case of LVL, that could be a good thing as European financial services continue to recover. The ETF’s weight to financial services is nearly 24%.
Guggenheim Global Dividend Opportunities Index ETF
Tom Lydon’s clients own shares of EFA.