Dividend, value, and low volatility strategies outperformed in the first half of the year.
U.S. equities posted their worst first-half performance since 1970, as inflation concerns, Fed rate hikes, and slowing economic growth weighed on markets, sending investors searching for defensive strategies and funds that offer generous income.
The three most popular funds in ALPS’ range of ETFs by net inflows all offered dividends and some featured equal weighting as a strategy — either at the individual stock or sector level.
The ALPS Sector Dividend Dogs ETF (SDOG) remained in the top spot from April, taking in $19 million in net inflows in June compared to $22 million in May inflows, according to VettaFi. SDOG, which has $1.2 billion in assets under management, has seen $80 million in inflows year to date.
This ETF offers exposure to a strategy that is largely similar to the “Dogs of the Dow” approach, which involves a portfolio consisting of the 10 components of the Dow Jones Industrial Average with the highest dividend yields. SDOG, however, casts a much wider net by drawing from the S&P 500 as its universe of potential stocks.
The fund maintains equal allocations to each of 10 sectors, unlike many dividend-focused products. The portfolio also consists of equal weighting to each component stock.
New to the leaderboard, the ALPS Emerging Sector Dividend Dogs ETF (EDOG) took in $6 million in June inflows, bringing its year-to-date net inflows to $6 million. The fund has $26 million in assets under management.
EDOG, the emerging markets variety of SDOG, is passively-managed to apply the Dogs of the Dow Theory to a rules-based investment strategy for emerging market stocks. The fund holds a relatively small, equal-weighted basket of 50 large-cap emerging market stocks selected based on high dividend yield.
The ALPS Equal Sector Weight ETF (EQL) dropped from the second to third spot in June. EQL took in $5 million in net inflows in June, half of the amount the fund brought in in May, bringing the total year-to-date net inflows to $31 million as of the end of June. The fund has $217 million in assets under management.
EQL offers exposure to the domestic equity market but utilizes a unique methodology to access this asset class.
Each sector of the economy receives equal weight in EQL, a strategy that results in a drastically different composition relative to market cap-weighted products such as the SPDR S&P 500 ETF (SPY). EQL is designed to offer more balanced exposure and has the added benefit of avoiding the potentially adverse impact of rallies or crashes in specific sectors of the economy.
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vettafi.com is owned by VettaFi, which also owns the index provider for SDOG and EDOG. VettaFi is not the sponsor of SDOG and EDOG, but VettaFi’s affiliate receives an index licensing fee from the ETF sponsor.