ETF strategies focus on dividends and active management

Investors are exploring various exchange-traded fund (ETF) strategies to manage risk and generate income. Vanguard offers low-cost options for long-term stability, specifically through the Vanguard Utilities ETF (VPU) and the Vanguard Energy ETF (VDE). The VPU fund, which carries a 0.09% expense ratio and a dividend yield of approximately 2.7%, focuses on utility companies providing water, electricity, and gas, including holdings like NextEra Energy and Duke Energy.

Concurrently, there is a growing trend toward actively managed ETFs. While passive index funds still hold the majority of assets, actively managed funds have grown to represent roughly 12% of total ETF assets, up from less than 4% in 2020. An example of this shift is the Capital Group Dividend Value ETF (CGDV), which utilizes active management to target U.S. large-cap value stocks with high-yield potential. Unlike many passive alternatives, CGDV may allocate up to 10% of its assets to dividend-paying stocks listed outside the United States.