When it comes to investing in ETFs, many financial advisors tend to recommend the same popular options to their clients. However, there are some lesser-known ETFs that are worth considering for those looking to diversify their portfolios and potentially achieve higher returns.
One such ETF that your financial advisor may not be aware of is the VictoryShares US Large Cap High Dividend Volatility Weighted ETF (NASDAQ:CDL). This passively managed ETF has been around for over a decade and focuses on harvesting dividend income from large-cap U.S. stocks. What sets this ETF apart is its unique approach to weighting its holdings. Instead of traditional methods like market cap or raw yield, CDL weights its stocks based on inverse volatility. This means that less volatile stocks receive a larger allocation in the portfolio, providing a more stable and potentially lucrative investment option.
Another under-the-radar ETF to consider is the Pacer American Energy Infrastructure ETF (NYSEARCA:USAI). This rules-based ETF focuses exclusively on midstream energy infrastructure stocks, which are less exposed to the volatility of oil and gas prices. With global energy volatility on the rise, companies in the midstream sector have been thriving, making USAI a potentially profitable investment. Despite its slightly higher expense ratio, the ETF offers a solid 4.14% dividend yield and has already seen a 21.7% increase year-to-date.
Lastly, the AAM S&P 500 High Dividend Value ETF (NYSEARCA:SPDV) takes a disciplined approach to dividend investing by tracking the S&P 500 Dividend and Free Cash Flow Yield Index. This index filters out companies with high yields but fragile financial health, focusing instead on dividend payers that are both profitable and financially sound. With a low expense ratio of 0.29% and a 3.54% monthly dividend yield, SPDV offers a solid and stable option for investors looking to build a reliable income stream.
In conclusion, while popular monthly dividend ETFs have their merits, it’s always beneficial to explore under-the-radar options like CDL, USAI, and SPDV for added diversification and potential growth in your investment portfolio. By incorporating these lesser-known ETFs alongside more mainstream options, you can create a well-rounded and resilient investment strategy for the long term.
