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Designed to provide broad exposure to the Technology ETFs category of the market, the ProShares S&P Technology Dividend Aristocrats ETF (TDV) is a smart beta exchange traded fund launched on 11/05/2019.

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.

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

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

The fund is managed by Proshares. TDV has been able to amass assets over $270.11 million, making it one of the average sized ETFs in the Technology ETFs. Before fees and expenses, TDV seeks to match the performance of the S&P TECHNOLOGY DIVIDEND ARISTOCRATS INDX.

The S&P Technology Dividend Aristocrats Index targets companies from information technology, internet and direct marketing retail, interactive home entertainment, and interactive media and services segments of the economy.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Operating expenses on an annual basis are 0.45% for this ETF, which makes it one of the cheaper products in the space.

It's 12-month trailing dividend yield comes in at 1.12%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

TDV's heaviest allocation is in the Information Technology sector, which is about 81.70% of the portfolio. Its Financials and Industrials round out the top three.

Looking at individual holdings, Cognex Corp (CGNX) accounts for about 3.28% of total assets, followed by Qualcomm Inc (QCOM) and Texas Instruments Inc (TXN).

TDV's top 10 holdings account for about 28.57% of its total assets under management.

Performance and Risk

The ETF has added roughly 5.48% so far this year and is up about 19.03% in the last one year (as of 06/06/2024). In the past 52-week period, it has traded between $58.71 and $74.59.

TDV has a beta of 1.05 and standard deviation of 19.76% for the trailing three-year period. With about 36 holdings, it has more concentrated exposure than peers.

Alternatives

ProShares S&P Technology Dividend Aristocrats ETF is an excellent option for investors seeking to outperform the Technology ETFs 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 $27.13 billion in assets, Vanguard Dividend Appreciation ETF has $78.35 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 Technology ETFs.

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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QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report

Texas Instruments Incorporated (TXN) : Free Stock Analysis Report

Cognex Corporation (CGNX) : Free Stock Analysis Report

Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports

iShares Core Dividend Growth ETF (DGRO): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.