Amplify ETFs rolled out an exchange-traded fund on Wednesday that invests in U.S.-listed securities, including depositary receipts and over-the-counter shares, that pay dividends and operate in the natural resources space.
The Amplify Natural Resources Dividend Income ETF (NDIV) distributes dividends on a monthly schedule. It tracks the EQM Natural Resources Dividend Income Index and is subadvised by Toroso Investments.
NDIV comes with an expense ratio of 0.59% and lists on the NYSE Arca.
A fact sheet from Amplify notes that when commodity and natural resource prices rise, related companies often produce significant free cash flow that manifests as dividends. The fact sheet also says dollar amounts for energy sector dividends have increased 50% since 2018.
The document points out that current global conditions could be spurring a new commodity supercycle. The last time such a supercycle occurred was in the early years of the 21st century.
The fact sheet further notes that the natural resource and commodity focus of the fund can serve as an inflation hedge. Additionally, the fact that it only holds U.S.-listed securities means it is not subject to foreign tax withholding.
The fund’s underlying index had 50 holdings as of NDIV’s launch, but the total count can range from 40 to 60. The index requires that eligible companies generate more than half of their revenues from business activities related to a single natural resource industry, including energy; chemicals; agriculture; precious and industrial metals; or mining, paper products and timber, according to the prospectus.
The index also sets the minimum size for constituents at $5 billion and a minimum annual dividend yield of 3%, among other requirements. Securities related to Russian-domiciled companies are excluded from the selection universe. The index’s constituents are weighted by dividend yield, with a 5% cap on individual securities, the document says.
NDIV’s largest holdings at launch are Petróleo Brasileiro S.A. (5.37%), China Petroleum & Chemical Corp. (4.73%) and Ecopetrol (4.6%). The United States has the largest country weight, at 29% of the index, followed by Canada and Brazil, both weighted at 10%.
Contact Heather Bell at [email protected]