Published Mon, 14 Dec 2020 13:57:36 -0500 on Seeking Alpha
Seeking AlphaETF AnalysisLVHD: A Low-Risk, High-Dividend ETFDec. 14, 2020 1:57 PM ET|| About: Legg Mason Low Volatility High Dividend ETF (LVHD)by: Fred PiardFred Piard Quantitative Risk & ValueExclusive market risk indicator paired with data-driven model portfolios.SummaryLVHD strategy and performance.
Comparing it with simple strategies.
Scanning the portfolio with quality metrics.
This dividend ETF article series aims at evaluating products regarding the relative past performance of their strategies and quality metrics of their current portfolios.
LVHD strategy and performance
The Legg Mason Low Volatility High Dividend ETF (Nasdaq: LVHD) tracks the QS Low Volatility High Dividend Index, which is a quantitative strategy following systematic rules. As of writing this, LVHD has a SEC Yield of 3.29% and a net expense rate of 0.27%.
As described on Legg Mason website:
The index screens for profitable companies that have the potential to pay relatively high sustainable dividend yields. Yields of the remaining securities are then scored higher or lower based on the attractiveness of their price and earnings volatility. The portfolio is constructed of the highest scoring securities subject to concentration limits: no individual component of the Index will exceed 2.5%, no individual sector (as defined by QS) will exceed 25%, and real estate investment trust (“REIT”) components as a whole will not exceed 15%. The number of component securities in the Index is anticipated to range from 50 to 100. The Underlying Index’s components are reconstituted annually and rebalanced quarterly.
Since inception (12/28/2015), LVHD has underperformed SPY in total return. It is quite normal in a period when most dividend-oriented strategies have lagged. It also underperforms the set of 125 S&P 500 stocks with the highest dividend yields, rebalanced quarterly (upper quartile in yield). However, LVHD has done a good job at minimizing the volatility measured... Read more