Meanwhile, HDV (up 4.3% year to date through July 28) and PEY (up 3.2%) have significantly lagged the S&P 500 index, due to their exposure to slower-growth, defensive sectors that have underperformed. Both HDV and PEY earn favorable risk considerations to CFRA for the holdings-based risk considerations inputs as well as for its low standard deviation.
In addition, these two ETFs have lagged the year to date 7.0% total return for the Lipper equity income mutual fund peer average. However, while index-based ETFs follow regimented rules, active mutual funds have more discretion and can focus on a range of income and growth attributes that can impact their record.
Related: 10 Hugely Popular ETF Plays in July
For example, ClearBridge Dividend Strategy Fund (SOPAX), a CFRA four-star ranked mutual fund is up 9.7% year-to-date. The fund seeks a combination of dividend income, dividend growth and long-term capital appreciation, but using fundamental analysis to select a diversified portfolio of companies with long histories of paying and raising dividends.
Financials (17%), technology (13%) and consumer staples (13%) are the largest sectors, with Apple (AAPL) and Berkshire Hathaway (BRK.B) among the top-10 holdings.