Daily ETF Watch: New Dividend Fund

September 22, 2015

Guggenheim has put into registration a U.S. large-cap dividend fund, hoping to enter a segment of the ETF space that’s populated by more than a dozen funds, including the $13 billion-in-assets iShares Select Dividend ETF (DVY | A-69).

The Guggenheim Dow Jones Industrial Average Dividend ETF will track an index that provides exposure to high-yielding equity securities of companies included in the Dow Jones industrial average, according to the prospectus. The portfolio will be yield-weighted based on 12-month dividend yields paid over the previous year.

The strategy will rebalance semiannually, and will come to market with a middle-of-the-road price tag of 0.30 percent. By comparison, DVY costs 0.39 percent; the second-largest high-dividend-yield U.S. equity ETF, the SPDR S&P Dividend (SDY | A-75), costs 0.35 percent.

But Vanguard’s take on the space, the Vanguard High Dividend Yield (VYM | A-98), costs only 10 basis points. The fund has more than $10 billion in assets.

These types of strategies have been hugely popular with investors, particularly since the financial crisis in 2008 sent many looking for sources of yield outside of traditional fixed-income securities. The 14 or so ETFs currently competing in this segment boast roughly $46 billion in combined assets, according to ETF.com data.

Guggenheim is the 8th-largest ETF issuer in the U.S. today, with more than $28 billion in assets under management.


Contact Cinthia Murphy at [email protected].

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