The Dividend Index is a single-factor index that only considers dividends. The Low Volatility Dividend Index is a dual-factor index that considers both dividends and volatility. Historically, the Low Volatility Dividend Index has outperformed in terms of yield. However, we know that past performance does not guarantee future results. We need to consider several questions: First, is the current valuation of the strategy high or low compared to its historical percentile? Second, how sustainable is the current strategy's yield in the future? Third, what is the current static valuation of the strategy?

Some indices have high yields because the current valuation of the strategy is at a high historical percentile. For example, if the past dividend yield was 5% and the current yield is 4%, the valuation has actually increased by 25%. Another reason is past market conditions, such as higher historical market volatility, which resulted in greater annual rotation spreads.

From a static valuation perspective, the CSI Dividend Index has a higher dividend yield than the Low Volatility Dividend 100 Index and is similar to the Low Volatility Dividend Index. Static valuation is an important factor affecting the sustainability of a strategy—the lower the static valuation, the stronger the sustainability. Therefore, from a sustainability standpoint, the CSI Dividend Index is better than the Low Volatility Dividend Index.

Since the static valuation of the Low Volatility Dividend Index is higher than that of the CSI Dividend Index, we need to consider future market volatility. The higher the volatility, the greater the annual buy-low-sell-high yield of the Low Volatility Dividend Index compared to the CSI Dividend Index. Whether this spread can outweigh the difference in static dividend yields is a key consideration.

Finally, another issue is that the Low Volatility Dividend Index has higher industry concentration than the CSI Dividend Index, which also affects sustainability. Therefore, from a yield perspective, if valuations are similar, the Low Volatility Dividend Index is preferable. From a sustainability perspective, the CSI Dividend Index is the better choice. After all, we cannot predict how the market will change in the future.