A Look at a New Super Dividend ETF
Looking to capitalize on the success of its popular Global X SuperDividend ETF (NYSE: SDIV), Global X introduced a U.S.-focused equivalent today in the form of the Global X SuperDividend U.S. ETF (NYSE: DIV).
Given its name, it is obvious the Global X SuperDividend U.S. ETF is a direct play on one prominent theme, that being investors' thirst for dividends and yield. However, the new ETF features an added source of allure for conservative. DIV tracks the INDXX SuperDividend U.S. Low Volatility Index, indicating the ETF is also play on the soaring popularity of low volatility products.
With an annual expense ratio of 0.45 percent, DIV is home to 50 stocks and caps sector weights at 25 percent. DIV's largest sector weights are 24 percent each to real estate investment trusts and utilities with master limited partnerships and telecommunications receiving weights of 18 percent and 12 percent, respectively, according to Global X data.
Like SDIV, DIV uses an equal-weight approach so no holding currently exceeds a weight of two percent. DIV's lineup includes Altria (NYSE: MO), Ameren (NYSE: AEE), AT&T (NYSE: T) and Bristol-Myers Squibb (NYSE: BMY).
Arguably, part of the reason SDIV has seen its assets under management total soar to over $384 million as of March 11 from $100 million in the third quarter of 2012 is because the ETF pays a monthly dividend. Global X expects that DIV will do the same.
Additionally, DIV applies a filter to "exclude companies that are most likely to cut their dividends, as determined by the Index provider. Furthermore, all companies are reviewed on a quarterly basis and can be removed from the Index if they forecast a significant dividend cut," according to Global X.
To be eligible for inclusion in the new ETF's index, holdings must have paid dividends for at least the past two years, have a market value of at least $500 million and average daily trading volume in dollar terms of at least $1 million over the past six months at the time the fund rebalances.
"“In an environment where people are seeking monthly income, the SuperDividend U.S. ETF offers convenient access to 50 high yielding companies in the US through one security," said Bruno del Ama, chief executive officer of Global X Funds, in a statement. "Based on the research we have conducted, we believe very high-yielding dividend stocks are generally overlooked and may play an important role in a portfolio."
That research includes the fact that "dividend payers in the 6-10% range showed similar risk characteristics to 0-2% and 2-6% dividend payers," according to Global X.
To that point, DIV could prove popular with investors if it follows a similar volatility as SDIV has. Over the past year, SDIV has been about 400 basis points less volatile than the iShares Dow Jones International Select Dividend Index Fund (NYSE: IDV) and noticeably less volatile than other diversified developed market dividend and non-dividend ETFs.
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