Daily ETF Watch: Dividend ETFs Coming

WisdomTree is adding more dividend exposure to its product lineup.

WisdomTree on Wednesday, May 7, is launching the WisdomTree Europe Dividend Growth Fund (EUDG) and the WisdomTree International Hedged Dividend Growth (IHDG), according to an NYSE communique. The ETFs target non-U.S. firms with good dividend-growth prospects.

The new ETFs will look to capture an important trend currently coursing throughout the ETF industry; namely, dividend-paying stocks. The dividend growth aspect is in the context of persistent low interest rates, highlighted by the Federal Reserve’s ongoing bond-buying economic stimulus. Low bond yields have resulting in investors using dividend-paying equities as a yield-replacement strategy.

The WisdomTree Europe Dividend Growth Fund will track the WisdomTree Europe Dividend Growth Index, which will provide investors exposure to dividend-paying common stocks of companies listed in developed European countries such as United Kingdom, Switzerland and Germany, according to its regulatory filing.

EUDG, the Europe-focused dividend ETF, has an expense ratio of 0.58 percent, or $58 for every $10,000 invested. 

IHDG will track the WisdomTree International Hedged Dividend Growth Index, which comprises 300 dividend-paying companies in developed European countries such as Austria, France and Germany, and Pacific Rim countries such as Japan, Australia and New Zealand, according to its regulatory filing. The ETF also has a currency-hedged overlay as part of its strategy.

IHDG, too, has an expense ratio of 0.58 percent, or $58 for every $10,000 invested.

ETF.com Analytics

Filings and launches are on the light side this morning, so we thought it was an opportune time to highlight some bright spots in an otherwise-dreary ETF landscape in the first quarter.

The S&P 500 Index traded sideways for much of the first quarter, as some of last year’s high-flying sectors such as tech, biotech and solar and related ETFs have been grounded by investor concerns about economic growth in the U.S. and China as well as by escalating tensions in Ukraine.

But there are patches of the market, including utilities and basic materials, with positive returns and inflows, as investors eschew momentum plays for more “boring” names.

For example, the $5.3 billion Materials Select Sector SPDR Fund (XLB | A-78) has gathered $1 billion year-to-date, according to data compiled by ETF.com Analytics. XLB has a high concentration in chemical stocks such as Dow Chemical and Monsanto.

Last month, Monsanto was upgraded by analysts at J.P. Morgan from neutral to overweight after the company reported better-than-expected second-quarter earnings results.

Also, the $6 billion Utilities Select Sector SPDR Fund (XLU | A-94) has gathered $1.26 billion year-to-date, according to data compiled by ETF.com Analytics. Utilities is the best-performing S&P sector year-to-date, and XLU is reflecting the sector’s fortunes, gaining some 14 percent year-to-date.