Russell Plans Three ‘High’ Dividend ETFs

December 29, 2011

Russell looks to get a piece of the hot dividend ETF space.


Russell Investments, the money management and indexing firm, filed paperwork with the Securities and Exchange Commission to bring to market what it called three high-yielding dividend ETFs, targeting an increasing popular segment of the market that includes one of the most successful recent ETF launches.

The three equity funds, for which Russell didn’t provide expense ratios, are:

  • Russell High Dividend Yield ETF, which will trade with the ticker “HDIV”
  • Russell Small Cap High Dividend Yield ETF, which will trade with the ticker “DIVS”
  • Russell International High Dividend Yield ETF, which will trade with the ticker “IDIV”

The three new funds suggest the company is positioning itself to get a piece of the ETF market investors are moving toward at a time of great economic uncertainty. Some of the most successful ETFs these days are serving up dependable dividends. As an example, the iShares High Dividend Equity Index Fund (NYSEArca: HDV) has gathered almost $1 billion since launching in March 2011.

Under normal circumstances, the funds will invest at least 80 percent of their total assets in securities comprising their underlying indexes. However, in instances where it is difficult to purchase all the stocks in their representative weightings, Russell reserves the right to purchase samplings of stocks in the respective indexes or overweight other stocks.

The funds are based on Russell indexes that take into account factors such as the financial stability of the companies they track. The filing said the internationally focused fund is based on the Russell Developed ex-U.S. Large Cap High Dividend Yield Index.

However, Russell noted in the filing that one of the risks in investing in high-dividend yield funds is that companies currently paying high dividends may reduce or discontinue their dividends. That, in turn, could have a significant impact upon the yield of these funds.

In addition, under certain market conditions, high-yielding securities may perform worse than the market as a whole.

Russell didn’t include expense ratios for its three new funds, and didn’t say on what primary exchange it would list the ETFs.

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