Ten funds are launching today, with five alone from J.P. Morgan. The remainder are issued by Vanguard, BlackRock’s iShares, John Hancock and Virtus.
J.P. Morgan Debuts Single-Factor Family
Today J.P. Morgan is rolling out five competitively priced single-factor ETFs. The new funds track indexes derived from the Russell 1000 Index.
The funds all list on the NYSE Arca exchange and come with expense ratios of 0.12%. The ETFs’ names and their tickers are as follows:
- JPMorgan U.S. Dividend ETF (JDIV)
- JPMorgan U.S. Minimum Volatility ETF (JMIN)
- JPMorgan U.S. Momentum Factor ETF (JMOM)
- JPMorgan U.S. Quality Factor ETF (JQUA)
- JPMorgan U.S. Value Factor ETF (JVAL)
iShares has a similar family of four single-factor ETFs covering minimum volatility, momentum, quality and value. Those funds come with an expense ratio of 0.15%. However, the iShares Select Dividend ETF (DVY) is not part of that family, and comes with an expense ratio of 0.39%.
Although the J.P. Morgan ETFs are not the cheapest funds associated with their respective strategies, they are among the cheapest. But perhaps more notably, the funds represent the cheapest and most complete family of single-factor ETFs available.
iShares Launches Dividend & Buybacks Fund
BlackRock’s iShares unit is debuting an income-oriented fund that will combine exposure to U.S.-listed firms that issue distributions to shareholders. The iShares U.S. Dividend and Buyback ETF (DIVB) tracks an index from Morningstar and comes with an expense ratio of 0.25%.
DIVB lists on Cboe Global Markets, parent company of ETF.com.
Rob Nestor, head of iShares Smart Beta at BlackRock, says that dividends and buybacks have long been recognized in academic literature as important sources of return.
“Investors still have a great interest in that income stream, but most dividend streams tend to bias to certain sectors and categories,” he noted. “When you combine dividends with buybacks, that tends to balance out the exposures to the sector base.”
Buybacks are more prominent, he points out, in sectors that don’t tend to pay out high dividends. He adds that the rate of buybacks has slowed from their high in recent years, but that far more companies are doing them.
“The global thirst for yield is not abating,” Nestor said.
The fund’s benchmark targets the U.S. companies with the largest dividend and share buyback programs in terms of dollar value from any size segment. The prospectus notes that the components represent 90% of the combined dividend and buyback distributions from the benchmark’s parent index.
The document further points out that the fund’s index was heavily weighted toward the financials and information technology sectors as of Sept. 30.
A comparable fund, the Cambria Shareholder Yield ETF (SYLD), targets companies with strong cash flow that are involved in the issuance of dividends, share buybacks and paying down their net debt. It has $128 million in assets under management and comes with an expense ratio of 0.59%.