With 2023 drawing to a close, investors and advisors alike are revisiting their portfolios. While markets entering 2023 saw plenty of serious risks, from initial, fast rate hikes to fear of a looming “imminent” recession, ahead of 2024 fewer risks stand out. That does inspire some positivity, but a lack of information can also hide unknown risks. As such, investors and advisors assessing their portfolios may want to check out an equal sector ETF like the ALPS Sector Dividend Dogs ETF (SDOG).
An equal sector ETF, in this case, SDOG, sets equal limits for sector allocations. That comes with advantages and disadvantages. On the one hand, avoiding overexposure to areas that could be too concentrated, like tech, can limit downside risk. An equal sector weighting can also expose a strategy to areas underweighted by the market that could surprise.
See more: “Are Dividends Payers Royalty or the Top Dog?“
On the other hand, limiting exposure to market-leading sectors like tech can limit a strategy’s upside. At the same time, opening up to less popular market segments can also see more esoteric risks take a bite out of a strategy.
That said, it could offer a particular appeal ahead of 2024. Without an overarching market narrative save for a baseline level of uncertainty and volatility, an equal sector ETF may intrigue investors. SDOG of course takes that approach but adds the ETF family’s reliance on the “Dogs of the Dow” theory.
The Equal Sector ETF SDOG and Its Dividend
SDOG invests in the firms with the most appealing dividends across the S&P 500 universe. While other dividend-heavy strategies end up with strong biases to utilities and financials, the fund’s equal sector weighting caps exposure to those firms.
Together, the strategy’s approach has helped it return 8.1% over the last three years, beating both its ETF Database Category and FactSet Segment Averages. Charging 36 basis points, the strategy tracks the S-Network Sector Dividend Dogs Index and may appeal to investors looking to change up their portfolios ahead of 2024.
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