Vaun

Dividend ETFs: Too Exposed to Financials

Disclosure: I own SDY.

Dividend ETFs: Too Exposed to Financials

Look at FVD as well. It and SDY are significantly outperforming the market..

Congratulations, you just found the best performing broad based ETFs for the past year... and had the audacity to state the ones recommending them "lack a basic knowledge of what lurks inside brand-name 'Dividend ETFs.'" Really, do some research. You open this article by mentioning C and BAC. You'll notice with a couple clicks that they're not even in the top 10 holdings for either of these dividend funds.

@ JLP - SDY did have a 40% financial allocation... The index would kick out any stocks that faltered on their dividend. If that's right the turnover this year will be substantial. Very interesting.

Now, without analyzing SDY in depth this may be a bit of a jump. But at a glance SDY (and FVD to a lesser extent) are heavily financial and heavily geared towards midcap value. Perhaps the smaller banks are doing well during this mess as people turn away from the megabanks with disgust. Or maybe smaller banks are just run better. Who knows.

Figuring out why these ETFs have outperformed would be a good article. Figuring out why some dividend ETFs have grossly outperformed others would be another good article. Figuring out if SDY has completely overhauled its portfolio due to dividend cuts would be yet another. Considering whether these ETFs will rebound as well as the broader market, a good idea. This article however..... useless if-not-harmful to the average investor.

It should also be noted that IXP and JXI (the author's recommendations) have easily been outperformed by both SDY and FVD over the past year.