“While the methodology tends to focus more on high dividends than low volatility, the risk metrics show a fund that’s about 20% less volatile than the S&P 500. The beta of the fund measures somewhere between 0.7 and 0.8, depending on the time frame used. Long-term backtested portfolio statistics show about a 10% reduction in risk, looking at the historical standard deviation of returns,” according to a Seeking Alpha analysis of SPHD.
SPHD does have exposure to rate-sensitive sectors as utilities and real estate stocks combine for over 30% of the ETF’s weight. However, interest rate sensitivity is balanced out with exposure to cyclical sectors, such as industrials and technology. Those two groups combine for over a quarter of SPHD’s lineup.
SPHD “has a forward P/E of just 15 with heavier weightings to traditionally conservative areas such as utilities, industrials and consumer goods and services. These areas are overvalued compared to historical norms, again due to the demand for high dividend stocks,” according to Seeking Alpha.
SPHD charges 0.3% year and pays its dividend on a monthly basis, allowing for steadier income for income investors.
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