VictoryShares US Large Cap High Div Volatility Wtd ETF

CDL

Market cap $357M

The current AI investment boom risks creating a bubble, with funding needs outpacing hyperscalers' cash flows and raising concerns of a lost decade for stocks. AI-related stocks have driven market gains, but overinvestment and high valuations make the S&P 500 (SPY) vulnerable to poor long-term returns. Dividend growth investors should focus on reasonably valued REITs and dividend stocks, which historically outperform during tech downturns.

VictoryShares US Large Cap High Div Volatility Wtd ETF holds 100 large and mid-caps selected by yields and weighted based on volatility. CDL is well-diversified, has value characteristics, and has a focus on utilities and consumer staples. CDL has underperformed SPY and SCHD but leads in total returns among specialized high-dividend, low-volatility ETFs.

AI-driven tech stocks dominate 2025 returns, leaving dividend and high-yield ETFs lagging due to limited AI exposure. REITs face mixed fortunes: ARE and DOC struggle with life science oversupply, while IVT, AMT, ADC, and VICI offer attractive dividend growth and value. My current buy list focuses on undervalued REITs and ETFs with strong dividend growth.

Given heightened economic uncertainty, I am leaning more defensive and sticking with my dividend growth investing strategy, emphasizing diversification and income stability. The frozen housing market, soft labor conditions, and stagnating consumer spending signal potential economic weakness, despite optimism in select sectors like tech. My ETF portfolio review shows shifting leadership, with midstream energy outperforming previously, but preferreds and tech-focused ETFs now leading as trends evolve.

CDL offers a compelling blend of high dividend yields, low volatility, and attractive valuation, making it appealing as rates decline and markets remain volatile. The fund's defensive tilt is driven by heavy allocations to utilities and consumer staples, supporting resilience and income during market pullbacks. Compared to peers, CDL trades at a discount and delivers above-average yields, though it lags the benchmark in growth and profitability due to sector choices.

CDL combines large-cap stocks, high dividend yields, and low volatility, making it a strong defensive complement to other dividend ETFs. Despite its higher expense ratio and similar volatility to peers, CDL boasts robust total returns and consistent dividend growth since inception. CDL's portfolio is heavily weighted in utilities and consumer staples, providing fundamental defensiveness and stability in various economic scenarios.

The US economy shows mixed signals, with weakening labor markets and housing starts, but resilient retail sales and industrial production driven by tariff front-running. Dividends and dividend growth stocks are outperforming Big Tech in 2025, with ETFs like HDV and CDL showing strong returns due to defensive sector exposure. My buy list focuses on "steady compounders" like Bar Harbor Bank, Healthpeak Properties, and Alphabet, each showing strong fundamentals and growth potential despite market volatility.

CDL's 3.2% dividend yield and low P/E ratio make it attractive for income-focused portfolios, but not for growth-oriented investors. The ETF's sector allocation is heavily tilted towards utilities, energy, and financials, with minimal exposure to technology and industrials. CDL's low volatility and defensive strategy provide downside protection, but its growth potential is limited due to sector biases.

CDL is an ETF that focuses on high dividend yields and low volatility. Both its methodology and its current allocations make this an adequately diversified fund that has also enjoyed a very good past performance since it was launched. That being said, it is likely to underperform VYM in the long run because of its high expense ratio and turnover rate.

VictoryShares US Large Cap High Div Volatility Wtd ETF offers a rules-based approach that bridges active and passive management. The ETF's investment process may result in betting on both good and bad sectors, potentially leading to so-so returns in 2024. A company's past 12-month profitability is essential to CDL's selection process.