The fund tracks an index that selects so-called dividend aristocrats from among S&P 500 constituents, meaning companies that have raised their dividends for many consecutive years. The name itself reflects the diversification rules layered on top to keep sector weights from tilting to one side.

It suits investors who want to spread their money across large caps with proven dividend track records while compounding dividend growth over the long term.

It is a passively managed (index-tracking) ETF run by First Trust.

The fund first screens for S&P 500 companies that have raised their dividends without interruption for a long period, then allocates weights under diversification rules that ease sector concentration. It invests most of its net assets in the index constituents, an approach close to full replication, and additions and removals are reflected regularly under the index rules.

• Rule-based selection that filters stocks using a quantitative criterion: a record of consecutive dividend increases
• Diversification rules applied at the index level to reduce sector concentration
• A focus on the sustainability and growth of dividends rather than dividend yield

Assets under management (AUM) stand at $70.3M, and the total expense ratio is 0.50% per year.

Even within the dividend growth category, selection criteria and weighting rules differ from product to product, so sector composition can vary widely among funds carrying the same label. It is wise to check the expense level and trading liquidity together.

Dividend growth strategies tend to behave relatively defensively when markets turn volatile, and they can lag the broader index when growth stocks lead. Recently, too, relative performance has moved up and down with the direction of interest rates and economic expectations.

When expectations for rate cuts build, money has been seen flowing back into dividend stocks. Conversely, when rates stay high, inflows have repeatedly cooled as dividend stocks lose out to bond yields in competition for capital.

Its strengths are a proven dividend track record and sector diversification, while its weakness is an expense burden that is relatively heavy compared with similar dividend ETFs.

VIG(ETF) and SCHD(ETF), shown in the table, are leading products in the dividend growth and high dividend categories, with lower fees and much larger assets under management. VYM(ETF) is an option that emphasizes dividend yield, and RDVY is also a dividend growth product from the same issuer, so its selection criteria are worth comparing. Funds such as DFAC are broad core products rather than dividend funds, so they are best used as a reference only for expense and fund size. You can also consider products such as NOBL, DGRO, and SPYD.

These are the items to review before investing in this ETF. The dividend history criterion is clear, but costs, size, and sector composition each need to be checked separately against your own goals.

Even a dividend growth strategy holds stocks as its underlying assets, so it falls along with the market in downturns. If interest rates stay high, the relative performance of dividend stocks as a whole is suppressed, and the expense burden also eats into long-term returns, which should be taken into account.

It is an option worth considering if you want to spread your money across large caps with proven dividend track records. If cost is your priority, compare its fees with VIG, SCHD, and similar funds, and confirm that the difference in selection criteria fits your own objectives.