Although the index can target both large- and mid-cap stocks, the high-yielding stocks are weighted by revenues, so the fund is dominated by large-cap companies. Approximately 47% of the fund is in 10 large-cap stocks.
The bigger risk to the fund will be its potential sensitivity to interest rates. When the Fed hinted it might reduce its asset purchases, SPLV, with its 30% weighting in utilities, fell 7.3% in late May and June. The S&P 500 fell only 4.5% during the same period. RDIV could be more sensitive to rising interest rates because it obviously has more exposure to utilities.
At the time of publication, Nusbaum had no positions in securities mentioned.
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