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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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 $677.23 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Value. SMDV is managed by Proshares. SMDV, 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
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 0.40% for SMDV, making it on par with most peer products in the space.
SMDV's 12-month trailing dividend yield is 2.88%.
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.
SMDV's heaviest allocation is in the Financials sector, which is about 29.70% of the portfolio. Its Industrials and Utilities round out the top three.
Looking at individual holdings, Wesbanco Inc (WSBC) accounts for about 1.97% of total assets, followed by Oil-Dri Corp Of America (ODC) and Csg Systems Intl Inc (CSGS).
Its top 10 holdings account for approximately 11.91% of SMDV's total assets under management.
Performance and Risk
So far this year, SMDV has lost about -2.50%, and is up roughly 5.41% in the last one year (as of 04/01/2025). During this past 52-week period, the fund has traded between $59.31 and $75.88.
The fund has a beta of 0.82 and standard deviation of 19.25% for the trailing three-year period, which makes SMDV a medium risk choice in this particular space. With about 99 holdings, it effectively diversifies company-specific risk.
Alternatives
ProShares Russell 2000 Dividend Growers ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $30.43 billion in assets, Vanguard Dividend Appreciation ETF has $86.13 billion. DGRO has an expense ratio of 0.08% and VIG charges 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 Reports CSG Systems International, Inc. (CSGS): Free Stock Analysis Report WesBanco, Inc. (WSBC): Free Stock Analysis Report Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports iShares Core Dividend Growth ETF (DGRO): ETF Research Reports Oil-Dri Corporation Of America (ODC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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