Global X is probably best known for its wide variety of
commodity and country specific
. These funds, like
for Colombia, or
for silver miners, are now among the most popular for the firm,
as both have over $200 million in AUM.
However, by far the most popular ETF in the company's lineup
SuperDividend ETF (
, which has close to $400 million in assets, roughly a fifth of
Global X's total AUM. This has clearly shown that investors, no
matter what is happening in the broad market, are embracing yield
strategies in droves for their portfolios (see
3 Red Hot Dividend ETFs
This endless demand for high yielding securities is probably
why Global X has looked to expand its lineup of ETFs in this
space, this time with a fund targeting the U.S. dividend market.
Following the success of the international-focused product,
Global X has launched the
SuperDividend U.S. ETF (
, offering up another high yielding choice in the ETF world.
DIV in Focus
This fund looks to zero in on the U.S. market, investing in 50
of the highest yielding stocks trading in America. The product
will utilize an equal weight methodology across the stocks, while
a sector cap of 25% will also be used in order to promote
3 Excellent ETFs with more than 4% Yield
Investors should also note that the dividend ETF expects to
pay monthly distributions, and that all constituents are reviewed
on a quarterly basis. Additionally, the product looks to charge
45 basis points a year in fees, a level that puts it in line with
many other dividend ETFs on the market today.
It is important to remember that this fund does have some
unique features that could help it separate from the pack in the
U.S. dividend ETF world though. First, a low-volatility screen is
applied in order to ensure that a lower risk portfolio is
created, as stocks with a beta over 0.85 (against the S&P
500) will not be included.
Additional filters are also used in order to increase the
safety even more, with one of the biggest ones being a screen to
remove companies expected to cut dividends. Firms included must
also have paid dividends consistently for the past two years, so
dividend safety is clearly key for this ETF (see
4 Best New ETFs of 2012
In terms of holdings, the fund skews towards traditional high
yield sectors such as REITs (24%), Utilities (24%), and MLPs
(18%). Other dividend stalwarts like telecoms, consumer staples,
and health care round out the rest of the top six, giving the
fund decent diversification across sectors.
"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 press
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."
How does it fit in a portfolio?
This ETF could be an interesting choice for those seeking a
broadly diversified play on the U.S. dividend market, which zeros
in on high yielding stocks. It also could be a good pick for
investors who are agnostic about how they obtain their yield in
the U.S. market, and who do not have a strong company specific
The fund could also make for a great play for investors who
are concerned about market volatility and its impact on their
portfolios. Going along with this theme of safety, DIV could be a
solid pick for those who like investing in high yielding
securities, but are always worried about dividend cuts, as this
fund looks to mitigate some of those concerns (see
4 Excellent Dividend ETFs for Income and
On the other hand, this dividend ETF may not be
appropriate for those who are already holding big positions in
sectors like REITs, utilities, or MLPs, as these represent a big
chunk of DIV's portfolio. Additionally, trading volumes may be a
little light in the beginning, and bid ask spreads could be
relatively wide, depending on the types of REITs and MLPs that
comprise the bulk of the portfolio.
Can it succeed?
If the popularity of SDIV is any guide, then yes, DIV could be
a top choice for many investors. However, it is worth noting that
the U.S. dividend ETF space is rife with competition, and that
initial asset accumulation may be difficult (read
Can You Beat These High Dividend ETFs?
There are literally dozens of high yield products currently
targeting American stocks, including several billion dollar
funds. These include the
Vanguard High Dividend Yield ETF (
iShares High Dividend Equity Fund (
, among countless others that have a bit less in invested
capital, such as the somewhat similar
These could pose as significant competitors to DIV and the
fund's quest to accumulate assets in this very popular, but
competitive corner of the market. This new dividend ETF will have
to find a way to differentiate itself based on its robust yield
and safety measures in order to establish a beachhead and become
another popular product in Global X's lineup.
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