Here are some interesting observations by
Factor Investor blog regarding some of the major ETFs that are dividend-oriented. They raise a few important questions re. their use as diversifiers:
(1) since many equity ETFs focus on large cap US companies, how much overlap is there between funds (more than you may have been led to believe);
(2) as dividend-paying stocks become overvalued, due to increasing demand, with some simultaneously becoming more and more over-weighted within dvd ETFs, at what point is the diversification benefit ("the only free lunch") largely eliminated by essentially overpaying (for the dvds)?
Dividend ETF's are by far the largest "Smart Beta" ETF category, having amassed $126 billion in assets as of the third quarter of 2016:
Other interesting figures in the source article:
http://www.factorinvestor.com/blog/2016/10/12/the-illusion-of-choice-in-etfs(h/t to Tadas Viskanta for the link)
