A new year means an opportunity to reassess portfolios, revisit priors, and plan ahead – for investors as well as ETFs. That includes a standout strategy from one of the hottest areas of the last few months, dividend ETFs, with one top three dividend ETF, specifically, making some interesting changes to its weights.
The WisdomTree US High Dividend Fund (DHS), which currently sits in the top three highest returning dividend ETFs over one year according to VettaFi, tracks the WisdomTree U.S. High Dividend Index, which changed its sector exposures in the middle of December. The biggest moves came to the healthcare and financials sectors.
DHS now has just a 13.15% exposure for healthcare, which had been its weighted sector exposure down from 21.6%. Financials, meanwhile, is now the highest weighted sector for the ETF, at 19.12% in the ETF’s exposures after the rebalance, up from 13.22%.
Among other changes are shifts away from consumer staples and towards sectors thought of less as traditional dividend plays like consumer discretionary and info tech, according to VettaFi head of research Todd Rosenbluth.
“The changes to the index are a reminder that passive ETFs are not static and often reflect the changing fundamentals within the market,” said Rosenbluth.
DHS charges 38 basis points for its exposures, particularly looking out for firms with value characteristics. The top three dividend ETF has seen an annual dividend yield of 3.8%, with a 7% return over one year compared to returns of -4.8% and -0.3% for its ETF Database Category Average and Factset Segment Average respectively over that time.
DHS has added $64 million in net inflows over one month and $13 million in net inflows over one month, and recently passed its 200-Day Simple Moving Average (SMA) which sits at $85. DHS itself sat at $86.3 as of market close Wednesday.
Investors have a lot of options among dividend ETFs, which can provide current income and buoy portfolios while markets still try to parse a possible looming recession and rising rates. DHS is making moves like others to adapt to the changing market and may be worth keeping an eye on in the coming weeks to see how its rebalance plays out.
For more news, information, and analysis, visit the Modern Alpha Channel.