Is ProShares Russell 2000 Dividend Growers ETF (SMDV) a Strong ETF Right Now?

Making its debut on 02/03/2015, smart beta exchange traded fund ProShares Russell 2000 Dividend Growers ETF (SMDV) provides investors broad exposure to the Style Box - Small Cap Value category of the market.

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.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

Managed by Proshares, SMDV has amassed assets over $717.92 million, making it one of the average sized ETFs in the Style Box - Small Cap Value. 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

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.40%.

It has a 12-month trailing dividend yield of 2.32%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

For SMDV, it has heaviest allocation in the Financials sector --about 32.7% of the portfolio --while Industrials and Utilities round out the top three.

Looking at individual holdings, Hni Corp (HNI) accounts for about 1.38% of total assets, followed by Federal Agric Mtg Corp-cl C (AGM) and Avient Corp (AVNT).

SMDV's top 10 holdings account for about 10.53% of its total assets under management.

Performance and Risk

So far this year, SMDV has added about 16.24%, and is up about 13.8% in the last one year (as of 09/01/2026). During this past 52-week period, the fund has traded between $64.01 and $79.12.

The ETF has a beta of 0.77 and standard deviation of 18.22% for the trailing three-year period, making it a medium risk choice in the space. With about 101 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 Index Fund ETF Shares (VIG) tracks NASDAQ US Dividend Achievers Select Index. iShares Core Dividend Growth ETF has $43.51 billion in assets, Vanguard Dividend Appreciation Index Fund ETF Shares has $112.86 billion. DGRO has an expense ratio of 0.08% and VIG changes 0.04%.

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

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This article originally published on Zacks Investment Research (zacks.com).

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