Looking to make some portfolio changes following the past week’s market tumult? ETFs can appeal as a flexible, transparent wrapper for all sorts of investment strategies. More than just your standard index-tracking fund, ETFs can offer specific — even bespoke — approaches to a particular moment. In that case, investors may want to take a closer look at a strategy like the ALPS Sector Dividend Dogs ETF (SDOG), its equal-sector-weight ETF.
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SDOG tracks the S-Network Sector Dividend Dogs Index. It sets itself apart with its equal-weight approach. Where some equal-weight strategies weight all their stocks equally, SDOG equal-weights overall sectors. It equal-weights 10 different sectors, which helps it avoid a traditional bias to utilities and financials, among other dividend-focused funds.
Equal-Sector-Weight ETF SDOG’s Approach
That type of sector-by-sector diversification could help if a tech-heavy market has a big hiccup again. Fears about overvaluation around AI continues to abound.
The equal-sector-weight ETF’s focus on dividends, too, could help. Firms issuing dividends often have a healthy overall outlook. That can help find firms that could be positioned to last amid high rates. At the same time, those firms could be already well-positioned when rate cuts hit. If the Fed were to cut rates as aggressively as some are now asking, those particular firms could benefit.
SDOG right now includes some notable biotech names like Bristol Myers Squibb (BMY) as well as energy firms like Eversource Energy (ES). The equal-sector-weight ETF has returned 10.5% over the last one-year period, outperforming its FactSet segment average. Charging a 36 basis point fee, the strategy could provide both some upside and a nice boost in case of further trouble in tech.
For more news, information, and strategy, visit the ETF Building Blocks Channel.
VettaFi LLC (“VettaFi”) is the index provider for SDOG for which it receives an index licensing fee. However, SDOG is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SDOG.
