Global X dives into trendy high-div/low-vol corner of ETF market with a new fund called ‘DIV.’
Global X Funds, the New York-based ETF provider known for niche strategies, today is launching a U.S.-focused high-dividend ETF that would also pick securities based on volatility levels—a strategy akin to a fund Invesco PowerShares rolled out in October.
The Global X SuperDividend U.S. ETF, which will list on the New York Stock Exchange’s electronic trading platform Arca under the ticker “DIV,” will track the INDXX SuperDividend U.S. Low Volatility Index and invest in stocks, master limited partnerships and REITs that have paid dividends consistently in the previous two years.
DIV, which will have an annual expense ratio of 0.45 percent, or $45 for each $10,000 invested, will also screen for volatility, picking securities that show lower volatility relative to the market, according to the latest regulatory filing detailing the fund.
As noted, DIV will go head-to-head with the PowerShares S&P 500 High Dividend Portfolio (NYSEArca: SPHD), one of the first funds to blend two of the hottest themes in ETF investing these days—high dividends and low volatility. Emerging global's EGShares Low Volatility Emerging Markets Dividend ETF (NYSEArca: HILO) was another pioneer in the segment, but focused on developing-world stocks.
Investors have embraced all sorts of strategies that promise income in an environment of compressed yields, as well as those that keep volatility in check. Funds like the $3.98 billion PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) and the $2.54 billion iShares High Dividend Equity Index Fund (NYSEArca: HDV) speak to that demand.
But what SPHD brought to the market—and what DIV also hopes to achieve—is the blending of these two themes into a single wrapper as a way to provide investors with one portfolio that not only generates income but also limits exposure to companies whose shares might be subject to relatively sharp movements in price.
DIV will also expand on Global X’s success with its global-in-scope Global X SuperDividend ETF (NYSEArca: SDIV), which has gathered $383 million since it came to market in the summer of 2011. SDIV costs 0.58 percent.
SPHD, which has gathered $73 million since its launch on Oct. 18, 2012, has an annual expense ratio of 0.30 percent.