First Trust to Introduce Tech Dividend, Multi-Asset ETFs Today
First Trust, the tenth-largest U.S. ETF issuer by assets, will introduce two new ETFs today. The First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV) will track the NASDAQ Technology Dividend Index.
Highlighting the case for tech dividends, First Trust cited a report from Moody's Investors Service. "Moody's projects the tech sector will pay out $26 billion in dividends in 2012. That is an increase of 14.3% from 2011 and higher than the 10.9% average annual growth of the prior four years," according to First Trust.
To be included in the index, companies must have a minimum market cap of $500 million and an average daily trading volume in dollar terms of $1 million over the past three months. Tech names account for 80 percent of the index while telecommunications stocks comprise the remainder. TDIV will charge an annual expense ratio of 0.5 percent.
The new ETF enters an arena loaded with competition including the the PowerShares QQQ (NASDAQ: QQQ), the Technology Select Sector SPDR (NYSE: XLK) and the iShares Dow Jones US Technology Index Fund (NYSE: IYW), just to name a few.
The Multi-Asset Diversified Income Index Fund (NASDAQ: MDIV) is the firm's other new introduction. That fund will track the Multi-Asset Diversified Income Index and charge an annual expense ratio of 0.68 percent. MDIV will allocate 25 percent of its portfolio to common dividend-paying stocks, 20 percent to REITs, 20 percent to MLPs, 20 percent to preferred stocks and 15 percent to high-yield corporate debt.
The index methodology includes volatility screens designed to limit securities that have high yields strictly because of poor price performance and the fund may provide less interest rate sensitivity than traditional fixed income securities due to income being generated from multiple sources, according to First Trust.
MDIV faces competition from established muti-asset ETFs such as the Global X SuperDividend ETF (NYSE: SDIV), the Guggenheim Multi-Asset Income ETF (NYSE: CVY), the SPDR SSgA Income Allocation ETF (NYSE: INKM) and the Arrow Dow Jones Global Yield ETF (NYSE: GYLD) to name a few.
Illinois-based First Trust had 70 ETFs with $7.46 billion in assets under management at the end of July, according to data from the ETF Industry Association.
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