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Is ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL) a Strong ETF Right Now?

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?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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.

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.

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

The fund is managed by Proshares. REGL has been able to amass assets over $1.21 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Value. REGL, before fees and expenses, 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

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.

With one of the more expensive products in the space, this ETF has annual operating expenses of 0.40%.

It's 12-month trailing dividend yield comes in at 2.53%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Representing 27.30% of the portfolio, the fund has heaviest allocation to the Financials sector; Industrials and Utilities round out the top three.

When you look at individual holdings, Williams-Sonoma Inc (WSM) accounts for about 2.38% of the fund's total assets, followed by Regal Rexnord Corp (RRX) and Mdu Resources Group Inc (MDU).

The top 10 holdings account for about 22.49% of total assets under management.

Performance and Risk

So far this year, REGL has lost about -6.57%, and is up roughly 0.30% in the last one year (as of 10/06/2022). During this past 52-week period, the fund has traded between $64.43 and $74.92.

The ETF has a beta of 0.82 and standard deviation of 25.72% for the trailing three-year period, making it a medium risk choice in the space. With about 49 holdings, it has more concentrated exposure than peers.

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 $22.25 billion in assets, Vanguard Dividend Appreciation ETF has $59.35 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 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
 
WilliamsSonoma, Inc. (WSM): Free Stock Analysis Report
 
MDU Resources Group, Inc. (MDU): Free Stock Analysis Report
 
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
 
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
 
Regal Rexnord Corporation (RRX): Free Stock Analysis Report
 
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