This Large Cap Dividend ETF Outperforms Benchmark and S&P 500

Markets are rebounding on better-than-expected earnings from banks and corporations. The financial sector performed strongly in earnings on Tuesday and hopes were rising that the economy might be in a better place than anticipated, at least for the time being.

“3Q and 4Q earnings should confirm fundamentals remain anchored in a resilient labor market and COVID reopening. Equity valuation will likely remain tied to global central bank rhetoric and rates, which is turning incrementally less negative. As such, we see equities primed for upside into year-end on resilient 2H22 earnings, low equity positioning, very negative sentiment, and given more reasonable valuation,” said Dubravko Lakos-Bujas, head of global macro research at JPMorgan, in a note to clients.

“Next year, however, we expect a more challenging earnings backdrop relative to current expectations,” he said.

Anticipation for a recession in 2023 continues to grow as the Fed remains aggressively hawkish about raising interest rates to combat persistent, increasingly entrenched inflation. Dividend strategies have gained in popularity this year as advisors and investors position their portfolios for a challenging economic environment for equities.

Investing in Quality Dividends With KLCD

The KraneShares Large Cap Quality Dividend Index ETF (KLCD) offers investment in U.S. large-cap companies providing reliable dividend payments and has outperformed both the broad Russell 1000 and the S&P 500 in total returns YTD. The fund is benchmarked to the Russell 1000 Dividend Select Equal Weight Index and utilizes smart beta to invest in large-cap companies within the U.S.

The fund offers exposure to companies that have demonstrated steady dividend growth over 10 years with no decrease in quarter-to-quarter dividends per share and also have an established record of stable cash flow and a robust business model. These characteristics together demonstrate what the funds deem as “quality.”

KLCD utilizes a smart beta strategy that seeks to deliver alpha at a price point that is cost-effective for investors. The fund is positioned to potentially perform well in a down-market environment, as strategies that focus on dividend growth can potentially offer improved performance in said environments.

The fund also stands to benefit from being equal-weighted, which is a strategy that can potentially mitigate volatility to a degree during times of market movement and changes.

KLCD carries an expense ratio of 0.41%. KFA Funds is a KraneShares company.

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