Designed to provide broad exposure to the Style Box - Small Cap Value category of the market, the ProShares Russell 2000 Dividend Growers ETF (SMDV) is a smart beta exchange traded fund launched on 02/03/2015.
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
SMDV is managed by Proshares, and this fund has amassed over $697.39 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Value. Before fees and expenses, this particular fund 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for SMDV are 0.40%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.29%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For SMDV, it has heaviest allocation in the Financials sector --about 34.4% of the portfolio --while Industrials and Utilities round out the top three.
Looking at individual holdings, Insperity Inc (NSP) accounts for about 1.23% of total assets, followed by Andersons Inc/the (ANDE) and Power Integrations Inc (POWI).
The top 10 holdings account for about 9.77% of total assets under management.
Performance and Risk
The ETF has added roughly 17.74% so far this year and is up about 21.11% in the last one year (as of 07/01/2026). In the past 52-week period, it has traded between $63.98 and $77.67
The ETF has a beta of 0.78 and standard deviation of 18.21% for the trailing three-year period, making it a medium risk choice in the space. With about 103 holdings, it effectively diversifies company-specific risk .
Alternatives
ProShares Russell 2000 Dividend Growers ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
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 $41.21 billion in assets, Vanguard Dividend Appreciation Index Fund ETF Shares has $109.61 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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ProShares Russell 2000 Dividend Growers ETF (SMDV): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).