Daily ETF Watch: Legg Mason Plans New Fund

Smart-beta ETF provider files for complement to existing fund.

Reviewed by: Heather Bell
Edited by: Heather Bell

A new filing from Legg Mason outlines plans for an ETF that will serve as a complement to its Legg Mason Low Volatility High Dividend ETF (LVHD). The proposed fund, the Legg Mason International Low Volatility High Dividend ETF (LVHI), will have a similar methodology to LVHD but target non-U.S. stocks from developed markets.

The underlying index, developed by Legg Mason subsidiary QS Investors, selects its components from the MSCI World ex-US IMI Index, including stocks that have been profitable over the preceding 12 months and exhibit yields that are supported by earnings. The prospectus notes that LVHI’s index is expected to include between 50 and 200 components.

The methodology is designed to target stocks with higher-than-average dividend yields and lower-than-average price and earnings volatility. Individual stocks are limited at rebalancings to 2.5% of the index, while individual sectors are capped at 25% and individual countries are capped at 15%. Real estate investment trusts are also limited to 15%.

The index includes a currency hedge to mitigate foreign currency fluctuations relative to the U.S. dollar.

LVHI is slated to come wtih an expense ratio of 0.40%, and the fund will list on Bats, the Lenexa, Kansas-based exchange operator that owns ETF.com.

Contact Heather Bell at [email protected].

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.