Weakness in AAM S&P 500 High Dividend Value ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The team managing the passive strategy earns a Below Average People Pillar. The strategy gets a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable overweight position in liquidity exposure and has a considerable underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. Even though the strategy's parent organization has some investor-friendly attributes like substantial personal investments from managers, an unsuccessful risk-adjusted track record holds it back. As a result, the firm obtains a Below Average Parent Pillar.

Analyst Rating

Valero Energy

Cummins

eBay

Phillips 66

Public Service Enterprise Group

Ford Motor Company

ONEOK

Coterra Energy

Kinder Morgan

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. AAM S&P 500 High Dividend Value ETF earns a Below Average Process Pillar rating. 

The process benefits from tracking an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. However, the rating is weakened by the fund's mediocre long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period. The parent firm's five-year risk-adjusted success ratio of 33% also holds the process back. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

 This strategy tends to hold smaller, more undervalued companies than its average peer in the Large Value Morningstar Category. Analyzing additional factors, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. In addition, this strategy has exhibited a tilt toward higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. This orientation tends to pay off most prominently when markets are hot. In this month, the strategy also had more exposure to the Volatility factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in consumer cyclical and real estate relative to the category average by 7.5 and 5.7 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and healthcare, underweight the average by 11.0 and 5.5 percentage points of assets, respectively. The portfolio is composed of 56 holdings and its assets are more dispersed than peers in the category. In particular, 20.8% of the strategy's assets are concentrated in the top 10 fund holdings, as opposed to the category average's 27.4%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 63% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Below Average

Process

AAM’s team earns a Below Average People Pillar rating. The team benefits from the strategy's fees, which rank in its category's least costly fifth. A higher expense ratio reduces net returns, so low costs give this team an advantage. The combined average three-year excess return of each manager detracts from the team. It shows that the funds they manage have lagged their respective category's average return.

People

AAM has a ways to go to become an industry-standard steward, resulting in a Below Average Parent Pillar rating. Aside from the overall view, the firm's portfolio managers have worked to align their interests with investors' by taking a personal stake and investing alongside them. Almost 45% of the firm’s assets are covered by invested managers. The AAM roster of open-end and exchange-traded funds has had below-average risk-adjusted performance, as shown by its average five-year Morningstar Rating of 2.3 stars. The firm charges fees on its open-end and exchange-traded funds that are on par with category peers. On average, fees on its funds are within the middle quintile, giving it neither an advantage nor disadvantage compared with the competition.

Parent

AAM S&P 500 High Dividend Value ETF

SPDV tracks an index of US large-caps selected for high dividend and free-cash-flow yields. Securities are equally-weighted.

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Equity Income Investing Redux

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Very Good News For Dividend Stocks

AAM S&P 500 High Dividend Value ETF selects five S&P 500 stocks in every GICS sector. It implements a strategy based on dividends and free cash flow. The yield, valuation and dividend growth are attractive.

SPDV: Yield And Valuation Look Good, Performance And Quality Are Not

SPDV: Now Yielding 4%, Is This Dividend ETF Worth Buying?.

SPDV: Now Yielding 4%, Is This Dividend ETF Worth Buying?

Invesco S&P Intl Developed High Dividend Low Volatility ETF

Stocks paying higher dividends showed their mettle during a challenging 2022: the S&P 500 High Dividend Index declined only a modest –1.1% even as the S&P 500 tumbled –18.1%. In our view, much of the volatility in high-dividend strategies, broadly speaking, comes down to portfolio design choices, which can create very different characteristics.

Taming Biases In High-Dividend Equity Strategies

SPDV is an equal-weight-by-sector high-dividend ETF expected to yield 3.60%. Constituents trade at low valuations due to its dividend yield and free cash flow yield screens. The strategy has failed over the last five years, delivering returns 10-40% less than other high-dividend alternatives.

Avoid SPDV: The High Dividend ETF With Low Rewards

SPDV is an ETF holding five S&P 500 stocks in each sector in equal weight. Constituents are selected based on dividend yield and free cash flow.

SPDV: Picking High Yield Stocks With Good Cash Flow

SPDV is a high-dividend ETF yielding 4%, and is one of the few ETFs to take an equal-weight-by-sector approach. Fees are 0.29% and the ETF has $65 in AUM. The approach is logical, but winds up selecting stocks with low growth and of the "deep value" variety. Consequently, SPDV's track record is poor compared to peers like SCHD.

SPDV: Deep-Value Dividend ETF Yielding 4%

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SPDV: Dividend Value Index ETF, 3.5% Yield, Lackluster Performance Track Record

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SPDV: This 3.50% High Dividend ETF Is Waving Several Yellow Flags

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News for AAM S&P 500 High Dividend Value ETF ETF (SPDV)