Several ETF providers, whether big or small, are adding
variety of new funds with innovative strategies into the space,
making 2013 a year of originality. With this trend, ALPS, a small
ETF issuer best known for its commodity products, appears to be
expanding in the international dividend ETF world, as evidenced
latest SEC filing
International Sector Dividend Dogs ETF (IDOG)
Income investing remains popular even in the growing markets.
This is especially true in the dividend ETF world, as many top
income funds have seen huge inflows so far in 2013.
The most popular dividend ETF in the company's line-up is the
Sector Dividend Dogs ETF (
), which has close to $171 million in assets, roughly one-fourth
of ALPS's total AUM. This clearly shows that investors are
embracing these products as a way to achieve equity appreciation
with a lower level of risk, and that the space is key for ALPS
4 Excellent Dividend ETFs for Income and
The filing targets the highest yielders in the international
equity market, potentially giving investors another option for
current income in today's yield starved environment. While a
great deal of the key information - such as the expense ratio-
was not available in the initial release, some key points were
released in the filing.
We have highlighted those below for yield-starved investors,
who may be looking for a high yield play from ALPS should it pass
The proposed ETF looks to track the performance of the
S-Network International Sector Dividend Dogs Index, before fees
and expenses. This benchmark seeks to focus on large cap
securities domiciled in Europe, Australia and the Far East (EAFE)
and focus only on the highest dividend paying stocks (i.e.
"Dividend Dogs") (read:
Red Hot Dividend ETFs
This is done by selecting the five stocks in each of the 10
Global Industry Classification Standard (GICS) sectors which
offer the highest yields as of the last trading day of November
of a particular year. Once this is determined, the fund looks to
equally weight each of these 50 securities, and rebalance these
once in a quarter in order to maintain a basket that is as close
to equally-weighted as possible.
How does it fit in a portfolio?
The product could be an interesting choice for investors
seeking a broadly diversified play on the international dividend
market, which zeros in on high yielding stocks (read:
Retire Early with these 3 Dividend ETFs
High quality dividend stocks and
are better options for investors searching for yields in the
current environment of rock-bottom interest rates. At the same
time, since most dividend paying companies are stable and mature
companies, the proposed ETF could also provide greater stability
and safety in a volatile environment.
Can it succeed?
There is still an appetite for these kinds of funds despite
several choices already in the space (read:
WisdomTree Files for Two Dividend ETFs
The most popular in the international bunch is the
WisdomTree Emerging Markets Equity Income Fund (
. It measures the performance of the highest dividend yielding
stocks selected from the WisdomTree Emerging Markets Dividend
Index. The fund has amassed about $5.5 billion in AUM and yields
3.45% in annual dividends. The ETF charges 63 bps in fees per
year from investors.
The next popular product is the
SPDR S&P International Dividend ETF (
, which is middle of the road for fees at 45 bps a year. The fund
offers robust dividend yields of roughly 5.42% and has managed
assets worth $1.3 billion (see more ETFs in the
Both funds have managed to amass a significant amount of
assets, suggesting that there is tremendous demand for
dividend-focused products. Given this trend, ALPS could
definitely have another winner on its hands if it can ever bring
its proposed International Sector Dividend Dogs ETF to
The fund, if approved, could give investors a new way to play
the international market with a focus on yield that doesn't look
at constant dividend increases (read:
Two Unconventional Sources of ETF Yield
We believe high dividend yielding securities and the ETF will
perform better over the next several years as baby boomers look
for sources of income in this low interest rate environment, and
we expect capital to continue flowing to high yielding equities
for a long time.
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WISDMTR-EM EQ I (DEM): ETF Research Reports
SPDR-SP INT DIV (DWX): ETF Research Reports
ALPS-SEC DV DOG (SDOG): ETF Research Reports
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