VSDA's 1.8% yield and 70% recovery from 2022 losses highlight rate sensitivity; dividend growth focus hasn't compensated, Seeking Alpha analysis shows.
The VictoryShares Dividend Accelerator ETF (VSDA) has lagged the S&P 500's recovery from the 2022 selloff. The fund fell 12% that year and recouped only about 70% of those losses through late 2024, a Seeking Alpha analysis showed.
The fund screens for companies with at least 10 consecutive years of dividend growth. Top holdings include Microsoft and Johnson & Johnson. The weighted-average market cap sits around $80 billion. The portfolio tilts toward mature, cash-rich names across consumer staples and healthcare.
VSDA's yield is roughly 1.8%. That is below the 2.8% offered by the Vanguard High Dividend Yield ETF (VYM). The Seeking Alpha analysis argued that the dividend-growth premium did not compensate for the rate-driven drawdown. In a rising-rate environment, the fund's longer-duration profile hurt returns.
A shift to lower interest rates would reduce the discount-rate pressure on VSDA's holdings. The expense ratio of 0.35% is reasonable for an actively managed strategy. Further rate hikes would likely extend the underperformance, the analysis said. For investors seeking current income, simpler high-yield ETFs may serve better, the analysis concluded.
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