Earlier this month State Street Global Advisors launched the SPDR Portfolio ETFs, a suite of 15 dirt-cheap ETFs to provide exposure to a range of core equity and fixed-income asset classes, representing a major shot in the ETF fee battle.
The funds in the SPDR Portfolio ETFs are reconfigured existing products with newly lowered expense ratios. That group includes the SPDR Portfolio S&P 500 High Dividend ETF (NYSEArca: SPYD). SPYD now has an annual fee of 0.07%, or $7 on a $10,000 investment, making it one of the least expensive dividend ETFs in the U.S.
SPYD tries to reflect the performance of the S&P 500 High Dividend Index, which is comprised of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield.
“Sporting a dividend yield of almost 4%, SPYD yields more than twice as much as the S&P 500. Of course, that means exposure to high-yield sectors as real estate and utilities combine for over 41% of this fund’s weight. That could make this dividend ETF vulnerable to a sudden spike in Treasury yields because the real estate and utilities sectors are among the most rate-sensitive sectors,” reports InvestorPlace.
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None of SPYD’s holdings account for more than 1.6% of the ETF’s weight. In addition to the large combined weight to rate-sensitive real estate and utilities stocks, the fund allocates almost 24% of its combined weight to cyclical consumer discretionary and technology names. Those sectors can help offset some of SPYD’s potential vulnerability to rising Treasury yields, should those yields actually rise.
The ETF also allocates over 15% of its weight to energy and financial services stocks, two sectors widely viewed as value plays.
“SPYD, which is about two years old, has nearly $207.3 million in assets under management, but it would not be surprising to see that sum grow thanks to this dividend ETF’s new, low fee. With an expense ratio of just 0.07%,” SPYD is currently tied for the honor of least expensive dividend ETF, according to InvestorPlace.
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