At Exchange: An ETF Experience 2022, ALPS’ director of ETF portfolio management and research Andy Hicks acknowledged that while inflation is “a big concern on investors’ minds,” he also noted that “the question is not how high it’s going to be going, but how much it’s going to come down at some point.”
“Which is what we hope for,” Hicks added.
Speaking with NYSE’s Judy Shaw for “ETF Leaders, Powered by the New York Stock Exchange,” Hicks said that while we’re amidst record high inflation, the ALPS Sector Dividend Dogs ETF (SDOG) may be a good fit for investors. SDOG selects the five stocks in 10 sectors (real estate is excluded) with the highest dividend yields. These stocks are equally weighted within the index, resulting in an even 10% weighting to each of the index’s 10 sectors.
“We equal weight those stocks, so when you put that against the S&P 500, you’re overweight these pro-cyclical sectors like energy, materials, industrials, and those are the sectors that are really working in this inflationary environment,” he said.
Value Poised for Growth
Looking at earnings, Hicks said that “value stocks,” which SDOG selects, “are really poised to grow in 2022 from an earnings perspective.”
“Inflationary trends, increasing interest rates, that’s really good for this value tilt in the market, and that’s where investors are positioning themselves,” Hicks added.
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