Gabelli Funds launched the Keeley Dividend ETF (NYSE:KDVD), an actively managed fund targeting income and long-term appreciation through small- and mid-cap dividend payers, just as markets hover near record highs and investors brace for a highly anticipated Federal Reserve rate cut.
• Keeley Dividend ETF stock is approaching key resistance levels. Why are KDVD shares at highs?
The SMID-cap-focused strategy seeks to uncover missed dividend opportunities and is managed by the Chicago-based team of Thomas E. Brown Jr. and Brian P. Leonard, who joined Gabelli after its recent acquisition of Keeley Asset Management.
“We believe this is a particularly compelling moment for dividend investors,” said Leonard. “Valuations in SMID cap equities are more attractive than their large-cap peers, while dividend strategies have lagged in recent years. KDVD is designed to take advantage of the current landscape by investing across the full spectrum of dividend-paying stocks using a disciplined, research-driven framework.”
To sweeten the launch, Gabelli is waiving the fund’s 0.90% management fee for the first year.
Markets Bracing For Fed Shock
The debut of KDVD lands squarely in a week dominated by Fed suspense. “As we head into trading this week, the odds of a 25-basis point cut are baked in and assumed. They currently sit at 86%. When they are this high going into the announcement, it rarely ever changes,” says Jay Woods, chief market strategist at Freedom Capital Markets.
With the S&P 500 charging to fresh highs, Woods noted the gravity of the moment. “The S&P 500 closed at a new all-time weekly high and is knocking on the door of its first close above 6900… it seems almost inevitable that we test that as we head into the announcement.”
Momentum indicators are flashing green, too. “Technically, we have a bullish sign in our RSI momentum indicator … It’s telling us technicians there is still room to run,” he added, joking that traders may want to keep their “S&P 7000 hats” within reach.
Powell's Next Test
This decision has been rendered especially murky by the internal divide at the Fed and the data drought caused by the partial shutdown of the government.
“The importance of this cannot be understated,” said Woods. Powell may opt for neutrality, he said, leaning on the shutdown to justify a data-dependent pause — something that “shouldn’t scare the market.”
He warned that dissents are almost a given. "Expect more vocal dissents this week."
As Powell’s term draws to a close, Woods also framed the moment as legacy-defining: “He has been steadfast in not bending the knee to pressure from the White House and remaining independent… Yet here we are ending 2025 near all-time highs and debating a rate cut as we hit them.”
Index Shake-Ups and Sector Standouts
S&P Dow Jones Indices are adding three names to the S&P 500, including Carvana Co (NYSE:CVNA), CRH PLC (NYSE:CRH) and Comfort Systems USA Inc (NYSE:FIX). That, according to Woods, should spark immediate buying as fund managers are compelled to rebalance.
Another bright spot is health care. The once-sluggish sector ETF is now the fifth-best performer of 2025, buoyed by giants like Eli Lilly And Co (NYSE:LLY) and Johnson & Johnson (NYSE:JNJ). Medical devices are also heating up, including the iShares Medical Devices ETF (NYSE:IHI) with strength across holdings including Medtronic Plc (NYSE:MDT) and Idexx Laboratories Inc (NASDAQ:IDXX).
Bottom Line
KDVD arrives at a moment when SMID-cap valuations, dividend lag and a potential Fed rate cut are converging to create a window of opportunity. If borrowing costs ease and investors rotate toward income and value, this ETF could be well-positioned to capture both renewed dividend demand and a rebound in smaller-cap equities.
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