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Legg Mason Introduces International High Dividend, Low Vol ETF

Legg Mason Introduces International High Dividend, Low Vol ETF

Earlier this week, Benzinga highlighted the Legg Mason Low Volatility High Dividend ETF (NASDAQ: LVHD), noting that this high-flying exchange-traded fund is benefiting from the dividend and low volatility factor themes.


The Legg Mason Low Volatility High Dividend ETF is proving to be one of the better-timed ETF launches of 2015, as the ETF has recently been regularly hitting a series of all-time highs.

LVHD is “focused on income, risk mitigation and capital appreciation. It is based upon the idea that a stock's ability to sustain a strong dividend payout is often associated with lower volatility, making these two characteristics complementary. Using a disciplined, rules-based methodology, the fund will screen for stocks with the potential for sustainable high dividends, while simultaneously screening out historically volatile stocks in the market,” according to Legg Mason.

Related Link: Best Sector ETFs For August: Boring Could Be Beautiful

LVHD now has an international equivalent in the form of the Legg Mason International Low Volatility High Dividend ETF (BATS: LVHI), which debuted Thursday. LVHI tracks the QS International Low Volatility High Dividend Hedged Index, a benchmark that seeks to give investors exposure to dependable ex-U.S. developed markets dividend-paying stocks with strong yields and low volatility.

Looking at LVHI's country lineup, the ETF can be viewed as a dividend spin on traditional EAFE exposures as new ETF's 117 holdings hail from the U.K., Japan, Australia and Switzerland, among other ex-U.S. developed markets.

Familiar names on LVHI's roster include Toyota Motor Corp (ADR) (NYSE: TM), AstraZeneca plc (ADR) (NYSE: AZN) and GlaxoSmithKline plc (ADR) (NYSE: GSK). None of LVHI's holdings currently accounts for more than 2.73 percent of the ETF's weight.

In addition to the dividend and low volatility advantages, LVHI also uses currency hedging, a potentially meaningful trait at a time when the dollar is gaining momentum against developed market currencies such as the British pound and the Japanese yen.

“Distressed companies are less likely to maintain dividend payments,” according to Legg Mason. “Our process seeks to select stocks that pay consistent dividends and screens out stocks that are either unprofitable or whose trailing or projected earnings do not appear to support the dividend.”

Populating The BATS

LVHI is also the latest in a long line of new ETFs to list on the Bats ETF Marketplace.

“With the addition of Legg Mason, there are 15 issuers with a combined 98 ETFs listed on the Bats ETF Marketplace. Eight new issuers have joined Bats in 2016, launching or switching a total of 43 ETFs compared to 30 ETFs for all of 2015,” according to a statement.

“Bats executed 24.9 percent of U.S. ETF trading in June and has been the #1 U.S. market for ETF trading and the #1 U.S. market for continuous equities trading for every month of 2016. In addition, Bats has won 29 percent of all new U.S. ETF listings this year.”

LVHI charges 0.4 percent per year.

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