Making its debut on 02/03/2015, smart beta exchange traded fund ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL) provides investors broad exposure to the Style Box - Mid 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
Managed by Proshares, REGL has amassed assets over $1.58 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Value. Before fees and expenses, REGL seeks to match the performance of the S&P MidCap 400 Dividend Aristocrats Index.
The S&P MidCap 400 Dividend Aristocrats Index targets companies that are currently members of the S&P MidCap 400 Index and have increased dividend payments each year for at least 15 years.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for REGL are 0.40%, which makes it one of the most expensive products in the space.
REGL's 12-month trailing dividend yield is 2.52%.
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.
This ETF has heaviest allocation in the Financials sector - about 28.80% of the portfolio. Utilities and Industrials round out the top three.
Looking at individual holdings, Essential Utilities Inc (WTRG) accounts for about 2.24% of total assets, followed by Perrigo Co Plc (PRGO) and Lancaster Colony Corp (LANC).
The top 10 holdings account for about 18.86% of total assets under management.
Performance and Risk
The ETF has added roughly 1.06% and it's up approximately 6.56% so far this year and in the past one year (as of 04/02/2025), respectively. REGL has traded between $72.52 and $88.79 during this last 52-week period.
The ETF has a beta of 0.79 and standard deviation of 16.27% for the trailing three-year period, making it a medium risk choice in the space. With about 55 holdings, it effectively diversifies company-specific risk.
Alternatives
ProShares S&P MidCap 400 Dividend Aristocrats ETF is a reasonable option for investors seeking to outperform the Style Box - Mid 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 $30.30 billion in assets, Vanguard Dividend Appreciation ETF has $85.77 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 - Mid 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 S&P MidCap 400 Dividend Aristocrats ETF (REGL): ETF Research Reports Perrigo Company plc (PRGO): Free Stock Analysis Report Lancaster Colony Corporation (LANC): Free Stock Analysis Report Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports iShares Core Dividend Growth ETF (DGRO): ETF Research Reports Essential Utilities Inc. (WTRG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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