The SuperDividend ETF can chalk up its troubles to a number of issues.
Weakness in the global macroeconomic environment has taken its toll on the fund’s ⅔ allocation to international stocks. While the ETF has limited exposure to political hotbeds like China and Brazil, it does have significant exposure to Europe which is struggling to maintain a recovery in the eurozone. Its large position in Australia which has lost about 10% this year has also affected the fund’s returns. The strong dollar has also weakened returns from overseas.
The fund has also leaned heavily on interest rate sensitive sectors like financials, real estate and utilities to achieve its yield. As mentioned previously, REITs have held up well but utilities and financials have struggled as the Fed has maintained its zero rate policy until it sees further signs of economic growth.
But maybe the ETF has just plain old performed lousy? The year-to-date performance of the ETF has lagged almost every sector and market cap that it has a reasonable exposure to.
It’s understandable that investors may search for ways to improve the middling yields they’ve seen on bank products and Treasuries but one of the principles of finance is that the chance to obtain higher returns comes with taking on additional risk and sometimes that risk doesn’t pay off. Some investors may be learning that rule firsthand.