Designed to provide broad exposure to the Style Box - Small Cap Value category of the market, the ProShares Russell 2000 Dividend Growers ETF (SMDV) is a smart beta exchange traded fund launched on 02/03/2015.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Because the fund has amassed over $643.67 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Value. SMDV is managed by Proshares. This particular fund, before fees and expenses, seeks to match the performance of the Russell 2000 Dividend Growth Index.
The Russell 2000 Dividend Growth Index targets companies that are currently members of the Russell 2000 Index and have increased dividend payments each year for at least 10 years.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for SMDV are 0.40%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.68%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 32% of the portfolio. Industrials and Utilities round out the top three.
Taking into account individual holdings, Spartannash Co (SPTN) accounts for about 1.31% of the fund's total assets, followed by Polaris Inc (PII) and H.b. Fuller Co. (FUL).
SMDV's top 10 holdings account for about 9.4% of its total assets under management.
Performance and Risk
The ETF has lost about -2.99% so far this year and was up about 0.91% in the last one year (as of 08/07/2025). In the past 52-week period, it has traded between $58.95 and $75.88
The fund has a beta of 0.83 and standard deviation of 19.57% for the trailing three-year period, which makes SMDV a medium risk choice in this particular space. With about 108 holdings, it effectively diversifies company-specific risk .
Alternatives
ProShares Russell 2000 Dividend Growers ETF is a reasonable option for investors seeking to outperform the Style Box - Small 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 (VIG) tracks NASDAQ US Dividend Achievers Select Index. iShares Core Dividend Growth ETF has $32.68 billion in assets, Vanguard Dividend Appreciation ETF has $93.36 billion. DGRO has an expense ratio of 0.08% and VIG changes 0.05%.
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 - Small Cap Value
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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ProShares Russell 2000 Dividend Growers ETF (SMDV): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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