SMDV “allocates its roughly $115 million in total assets among a minimum of 40 different names (it currently has positions in about 60 names). The fund starts by applying liquidity and tradeability screens prior to identifying stocks with the necessary dividend history. It equal weights all names that it qualifies for the portfolio making sure that no individual sector comprises more than 30% of total assets,” according to a Seeking Alpha analysis of the ETF.
SEE MORE: Dividend Growth ETFs Could Continue to Outperform
As the broad equities market pushes toward new highs, riskier assets like small-caps have been able to rally back much quicker. When the economy is doing well and the markets rally, we see sentiment for more nimble smaller companies improve and outperform those of their more languorous, larger peers.
“While small caps in general are risky, the focus on long-term dividend payers takes a significant amount of risk out of the portfolio. By targeting long-term dividend growth names, the valuation metrics of the portfolio look fairly similar to those of their large cap counterparts,” notes Seeking Alpha regarding SMDV.