“Expenses are the scourge of investment returns and low fees mean more money stays in your pockets. While, it took the fund a couple of years to gain its footing (it ranked in the bottom 10% of its Morningstar category in each of its first two years), it’s been a top quartile performer over the past three years. Even better, it has achieved those returns at about 15% less risk than the S&P 500. The S&P 500 has delivered better total returns but the Core High Dividend Yield ETF has provided superior risk-adjusted returns, as evidenced by its three-year alpha of 2.16%,” according to ETF Daily News.
Companies that have consistently increased dividends tend to be high in quality and show a strong potential for growth. These dividend growers have been able to withstand periods of market duress, exhibiting smaller drawdowns as investors sold off riskier assets, while still delivering strong returns on the upside, to generate improved risk-adjusted returns over the long haul.
For more on smart beta ETFs, visit our Smart Beta Channel.