Looking at an uncertain portfolio for 2025? You wouldn’t be alone in doing so. After a strong 2024 for key market indexes, both political and market uncertainty loom. In the latter category, concentration risk, specifically, poses a notable risk to broad market index funds. The S&P 500 and its related index funds, for example, relied on just a handful of firms to drive a significant part of their performance in 2024. In 2025, then, it may be worth considering how an equal-weight ETF can add smart diversification for investors.
See more: Look to Quality ETF OUSM to Lead the Way into 2025
Many investors likely add a few investments here and there in their equity sleeves to diversify their portfolios. While diligent, that can add layers of complication, managing investments into financials, utilities, healthcare, and other areas separately. The right equal-weight ETF, by contrast, can provide diversification in a single package, and often with a twist.
An enhanced equal-weight ETF like SDOG, leaning heavily on dividends, offers a strong example. The ALPS Sector Dividend Dogs ETF (SDOG ) tracks the S-Network Sector Dividend Dogs Index. The fund charges a 36 basis point fee for its approach, employing a variation of the “Dogs of the DOW” approach.
Specifically, the equal-weight ETF draws from the S&P 500 to craft an equal allocation to 10 sectors. Within those allocations, SDOG equal-weights the stocks therein, picking the five highest-dividend-yielding stocks from each of the 10 sectors.
Emphasizing dividends can help the ETF identify firms with healthy internal outlooks. At the same time, those dividends can offer helpful current income for portfolios. Together, those factors boost the equal-weight ETF and add an additional boost to the diversification it can provide.
Per SS&C ALPS Advisors data, SDOG offered a 3.87% trailing 12-month yield as of January 13. For those looking at equal-weight funds to start 2025, SDOG stands out as a notable option to watch.
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VettaFi LLC (“VettaFi”) is the index provider for SDOG, for which it receives an index licensing fee. However, SDOG is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SDOG.
