Are there any securities that offer a similar potential upside as the SPY but are better structured and defend better against savvy arbitrageurs? I offer three answers for your consideration. These securities are of no interest to me as an arbitrager seeking a mispriced bet, but may have be quite interesting to anyone who wants to protect their assets from such efforts and get the most from their index.
My second nomination is the WisdomTree Total Dividend ETF (DTD). While I would prefer weighting according to asset value or cash flow, dividend weighting is a huge improvement upon market capitalization weighting because it takes out the circularity and auto-catalyzing nature of the SPY. A passive, long-term investor can gain diversified equity exposure with a focus on the dividends that one owns without fixating on the random fluctuations in ever changing market capitalizations.
Source: Seeking Alpha
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