DLN has an almost 17% weight to technology, its largest sector weight, indicating the ETF is levered to future sources of dividend growth. However, the fund features a combined an almost 37% combined weight to the staples, health care and energy sectors, which have reputations for being consistent dividend growers. S&P Capital IQ also rates DLN overweight.
In what may be a surprise to some investors, the Guggenheim S&P 500 Equal Weight ETF (NYSEArca: RSP) has also slightly outpaced the S&P 500 over the past month. That may be seen as a surprise because RSP’s consistent out-performance of the S&P 500 is often attributed to its larger weight to small-cap stocks.
In reality, RSP efficient rebalancing of equal-weight ETFs, either sector or broad market funds, not only drives returns, but also helps these ETFs steer clear of concentration risk. [How to Evaluate ETFs]
S&P Capital IQ also rates RSP overweight.
WisdomTree LargeCap Dividend Fund
Tom Lydon’s clients own shares of RSP.