First Trust is set to ring the opening bell on the Nasdaq
exchange Tuesday morning to kick off two new ETFs:The First Trust
Nasdaq Technology Dividend Index Fund (TDIV) andFirst Trust
Multi-Asset Diversified Income Index Fund (MDIV).
As its name implies, TDIV holds tech stocks that pay
"The dividend growth rate of the technology sector has
outpaced all other sectors over the past seven years and we
believe the outlook for continued dividend growth is good," First
Trust said in statement.
Of course, there's no guarantee that they'll continue paying
dividends or increase them.
Tech companies will pay $26 billion in dividends in 2012, up
14% from 2011, First Trust said, citing Moody's research. In the
past four years, tech dividends grew 11% a year on average.
"A decade after the tech bubble burst, (tech) companies have
matured into companies with strong balance sheets and financial
flexibility and are paying dividends, while continuing to
reinvest in their businesses," First Trust wrote.
TDIV will compete with numerous broad tech ETFs:First Trust
Nasdaq-100-Tech Index (
),iShares Dow Jones U.S. Technology (
),PowerShares Dynamic Technology (
),SPDR Morgan Stanley Technology (
),Technology Select Sector SPDR (
) andVanguard Information Technology ETF (VGT).
XLK, the most popular with $9.2 billion in assets, is up
19.23% year to date and 32.59% in the past 12 months vs. 13.29%
and 28.08% for the S&P 500 over the same periods.
MDIV is jumping on a dividend bandwagon that ETF providers
have been riding in the low-interest rate era.
MDIV's competitors includeETRACS Monthly Pay 2x Leveraged
S&P Dividend ETN (SDYL),Global X SuperDividend ETF
(SDIV),iShares Dow Jones Select Dividend (DVY),PowerShares
Dividend Achievers (PFM),PowerShares High Yield Dividend
Achievers (PEY),SPDR S&P Dividend (SDY),Vanguard Dividend
Appreciation (VIG) andVanguard High Dividend Yield (VYM).
VIG, with $11.6 billion in assets, now yields 2.09%. It's
gained 8.55% year to date and 25.55% the past year.
A list of holdings and fees weren't available for TDIV and
New Hedge Fund Like ETF
Actively managed ETF provider AdvisorShares rolled out Aug. 8
a new ETF managed by Commerce Asset Management, which aims to get
people of modest means as close as possible to investing in a
hedge fund. It charges a net annual management fee of 1.64%, a
bargain compared with 1% to 2% plus 20% of returns that hedge
funds typically charge.
AdvisorShares QAM Equity Hedge ETF (QEH) seeks to mimic the
investing strategies of long/short equity hedge funds and to
outperform at least half of the constituents in the HFRI Equity
Hedge Total Index. The benchmark, created by Chicago-based Hedge
Fund Research, includes more than 1,000 hedge funds with a
variety of strategies.
The index is up 2.51% year to date and was down 19.08% in
2011, according to HFR. It gained 8.92% in 2010 and 13.14% in
2009. By contrast, the S&P 500 returned 13.29% year to date,
1.89% in 2011, 15.06% in 2010 and 26.37% in 2009.
QEH uses patented software to comb hedge funds and replicates
their exposures with ETFs. It seeks to outdo the S&P 500 with
QEH now has 40% of assets parked in cash in the form ofiShares
Barclays Short Treasury Bond (SHV) andSPDR Barclays Capital 1-3
Month T-Bill (BIL). It owns a variety of S&P 500, sector and
foreign ETFs while shorting ETFs tracking the yen, small-cap
Russell 2000 index and European stocks.
QEH competes withIQ Hedge Multi-Strategy Tracker ETF (QAI),IQ
Hedge Macro Tracker ETF (MCRO),AlphaClone Alternative Alpha ETF
(ALFA) and iSharesDiversified Alternatives Trust (ALT).
QAI, with $212 million in assets, is up 3.03% year to date and
4.40% the past year.