QDPL: Clever Concept, Disappointing Costs · Wealth Builders Community

QDPL: Clever Concept, Disappointing Costs

A relatively new ETF (inception 7/12/21) floating around the income/dividend crowd is QDPL from Pacer ETFs. This fund seeks to provide 400% of the dividends received from the S&P500 index while reducing exposure (approx. 89% exposure to S&P500). I like Pacer ETFs and this fund is an interesting concept but the 0.60% fee does not justify the strategy.

The fund utilizes S&P Dividend Futures. These futures are derivative contracts on future dividend payments of the S&P500 index. To offset leverage, the fund holds treasuries with equivalent duration and same notional value as the futures.

What I like- The fund has done an incredible job keeping up with the total returns of S&P500 index without sacrificing upside like many options-based equivalent ETFs for the S&P500. This could be 1 potential option for those in retirement or retirement accounts (not advice) with S&P500 or US exposure of the portfolio if the dividend is needed without sacrificing as much growth compared to a fund like JEPI. Pacer is also an excellent ETF provider and I like their Cash Cows ETF series.

What I don't like- The expense ratio is very pricey for an index strategy even with the additional complexity of adding futures and treasuries. 0.60% for a strategy that isn't actively traded is a huge downside it is even higher than some of their Cash Cows series ETFs. The fee should be closer to 0.20-0.30% for something like this.

If you don't need the dividend or are on a taxable account then in my opinion stick to a low-cost S&P500 ETF like SPLG(0.02%), VOO(0.03%), or SPY(0.09%). Price return over the last 3 years has only returned 10.07% for QDPL vs 30.92% for SPY thus growth for QDPL is reliant on dividend reinvestment. The total return for QDPL is 32.98% vs 36.82% for SPY which could be potentially lower if we account for taxes(consult CPA). (returns from seeking alpha at the time of writing)

In conclusion, it might still be better to stick to a low-cost alternative and manufacture dividends(sell shares) unless you need income proof much like the scenario with the options funds. I like this fund better than options funds however the expensive strategy will still likely underperform manufactured dividends from a low-cost competitor or dividend growth funds. Of course, this is my opinion not advice check with a professional and DYOR

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