ETF Watch: Legg Mason Plans EM High Div, Low Vol Fund

August 29, 2016

A new filing from Legg Mason outlines the firm’s plans for an ETF that will offer exposure to low-volatility, high-dividend stocks. The Legg Mason Emerging Markets Low Volatility High Dividend ETF (LVHE) will serve as a complement to the Legg Mason Low Volatility High Dividend ETF (LVHD) and the Legg Mason International Low Volatility High Dividend ETF (LVHI).

The fund will track the QS Emerging Markets Low Volatility High Dividend Hedged Index, which is derived from the MSCI Emerging Markets IMI Index. The index was created by QS Investors, a subsidiary of Legg Mason. It typically includes 50 to 200 stocks selected from 23 different emerging market countries. The benchmark is also currency hedged, as is LVHI, and individual company weights are capped at 2.5%, while sectors and countries are capped at 25% and 15%, respectively.

The fund’s benchmark screens its parent index’s components first for profitability and then to exclude stocks that don’t pay dividends. The index’s design favors stocks with low price and earnings volatility and those from countries with lower-than-average interest rates.

The filing didn’t include an expense ratio or listing exchange.

Contact Heather Bell at [email protected].

 

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