A smart beta exchange traded fund, the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) debuted on 10/09/2013, and offers broad exposure to the Style Box – Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you’re the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
NOBL is managed by Proshares, and this fund has amassed over $9.98 billion, which makes it one of the larger ETFs in the Style Box – Large Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 DividendAristocrats Index.
The S&P 500 Dividend Aristocrats Index targets companies that are currently members of the S&P 500, have increased dividend payments each year for at least 25 years & meet certain market capitalization & liquidity requirements.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.
NOBL’s 12-month trailing dividend yield is 2.03%.
Sector Exposure and Top Holdings
It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
NOBL’s heaviest allocation is in the Consumer Staples sector, which is about 23.30% of the portfolio. Its Industrials and Healthcare round out the top three.
Taking into account individual holdings, Albemarle Corp (NYSE:ALB) accounts for about 1.90% of the fund’s total assets, followed by Amcor Plc (AMCR) and Brown-Forman Corp-Class B (BF/B).
NOBL’s top 10 holdings account for about 17.71% of its total assets under management.
Performance and Risk
Year-to-date, the ProShares S&P 500 Dividend Aristocrats ETF has lost about -8.87% so far, and is down about -2.06% over the last 12 months (as of 07/26/2022). NOBL has traded between $82.44 and $98.70 in this past 52-week period.
The fund has a beta of 0.89 and standard deviation of 23% for the trailing three-year period, which makes NOBL a medium risk choice in this particular space. With about 65 holdings, it effectively diversifies company-specific risk.
ProShares S&P 500 Dividend Aristocrats ETF is a reasonable option for investors seeking to outperform the Style Box – Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core Dividend Growth ETF (DGRO) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (ETF:VIG) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $22.94 billion in assets, Vanguard Dividend Appreciation ETF has $61.94 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box – Large Cap Value.
Amcor PLC (AMCR): Free Stock Analysis Report
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