U.S. equity ETFs the ALPS Sector Dividend Dogs ETF (SDOG) and the ALPS Equal Sector Weight ETF (EQL) are two of ALPS’ most popular ETFs in 2022, as measured by inflows year to date.
SDOG and EQL notably both utilize an equal weight methodology but focus on different aspects of the U.S. equity market. Equal weight strategies are favored for reducing concentration risk and enhancing diversification in a portfolio.
SDOG has consistently been one of the most popular ETFs in ALPS’ range, accreting flows at a steady pace this year, garnering $104 million year to date as of November 4, according to VettaFi. SDOG saw $9 million in October flows, ending the month with $1.2 billion in assets under management.
Year to date as of November 4, SDOG has returned -3.91%. The S&P 500 Index returned -20.89% during the same period.
SDOG applies the ‘Dogs of the Dow Theory’ on a sector-by-sector basis using the S&P 500 Index as its starting universe of eligible securities. SDOG provides high dividend exposure across 10 sectors of the market by selecting the five highest-yielding securities in each sector and equally weighting them, according to ALPS.
The fund maintains equal allocations to each of the 10 sectors, unlike many dividend-focused products, including the First Trust Morningstar Dividend Leaders Index Fund (FDL) and the iShares Core High Dividend ETF (HDV). The portfolio also consists of equal weighting to each component stock.
EQL also took in $9 million in inflows last month, ending October with $298 million in assets under management. The fund has accreted $109 million in year-to-date inflows.
From January 1 through November 4, EQL has returned -12.45%.
EQL delivers exposure to the U.S. Large Cap Equity market by investing equal proportions in 11 Select Sector SPDRs and rebalances quarterly. EQL delivers moderate, yet meaningful exposure to every sector of the market.
The equal weighting strategy 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.
SDOG and EQL charge 40 basis points and 27 basis points, respectively.
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vettafi.com is owned by VettaFi, which also owns the index provider for SDOG. VettaFi is not the sponsor of SDOG, but VettaFi’s affiliate receives an index licensing fee from the ETF sponsor.
