ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Dividend Channel
  2. As Interest Rates Rise, Rely on Dividend ETFs
Dividend Channel
Share

As Interest Rates Rise, Rely on Dividend ETFs

Elle CarusoMar 18, 2022
2022-03-18

The Federal Reserve said Wednesday it would raise interest rates in addition to penciling in further rate increases this year to combat inflation, which has continued to swell and has reached four-decade highs. 

Fed officials have decided to raise the benchmark federal-funds rate by a quarter percentage point to a range between 0.25% and 0.5% from near zero. Most of the Fed officials projected pushing it up to at least pre-pandemic levels, which would be consistent with raising interest rates at every scheduled meeting this year.

Rising rates can have a disproportionate effect on certain market sectors. While growth stocks haven’t been consistently worse performers than value stocks during periods of rising rates, they’ve been hit particularly hard during the recent spike in interest rates due to their substantially higher valuations at the outset of recent market volatility.

Value-oriented stocks and ETFs have held their ground so far this year while the broad market has fallen, which has encouraged investors to rotate away from growth ETFs and stocks in favor of high dividend-yielding investments, moving into sectors such as financials and energy.

A dividend ETF offers income and capital appreciation, in addition to generally being viewed as less risky than other investments.

The companies paying dividends are often mature firms — though some can be quite small — that have mastered their business, made the essential investments, and now generate more money than they have a meaningful use for.

Looking at the nine-year record for all global equity income and global large-cap core ETFs and open-end funds, sorted by nine-year Sharpe ratio, the SmartETFs Dividend Builder ETF (DIVS C+), managed by Guinness Atkinson Asset Management at the top of the pack.

The only fund with a higher Sharpe ratio over a nine-year period, as of the end of January, is the Morgan Stanley Global Franchise Portfolio (MSFAX), a mutual fund; however, where DIVS beats MSFAX is in consistent return over a five-year period.

When considering ETFs exclusively, DIVS is the winner by nine-year Sharpe ratio, as of end of January, trailed by the BlackRock iShares Global 100 ETF (IOO A-), the BlackRock iShares MSCI Kokusai ETF (TOK B+), and the BlackRock iShares MSCI World ETF (URTH A-).

For more news, information, and strategy, visit the Dividend Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X