Tuesday, May 16, 2006

The flight to SDY quality

A fairly interesting graph of the performance of the SPDR Dividend ETF (SDY) vs. (SPY) The S&P 500 ETF. SPY and SDY nicely delink on Friday with the SPY declining much more than SDY.


Because most of the constituents of S&P Dividend Aristocrats a large cap companies, ordinarily, SDY tends to closely track the S&P 500. In my opinion the rapid declines on Thursday and Friday [May 11-12 2006] caused a flight to quality. The greater value exposure and higher earnings quality of the Dividend Aristocrats helped to moderate the effects of a general decline in equity values.

SDY is one of my core portfolio holdings, because of the combination of diversity, proven quality, and low expenses (0.30%).


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