Invesco PowerShares, seeking to leverage the success of its
PowerShares S&P 500 Low Volatility Portfolio
(NYSEArca:SPLV)-but with a twist-today is launching an ETF that
cherry-picks stocks that have both high dividends
The PowerShares S&P 500 High Dividend Portfolio
(NYSEArca:SPHD) will track the S&P 500 Low Volatility High
Dividend Index, which consists of securities that have historically
provided high-dividend yields with lower volatility. The benchmark
assigns greater weights to those securities with the highest
It's a clever twist that marries two of the most powerful trends
in the ETF market over the past year. Investors are both looking
for a way to minimize the sometimes-rough ride in markets while
earning relatively attractive dividends to cushion the corrections
in a post-crash era of ultra-low bond yields.
The question remains whether SPHD, which will have a 0.30
percent annual expense ratio, will have any of the success that
PowerShares' low-volatility fund SPLV and the iShares High Dividend
Equity Index Fund (NYSEArca:HDV) had when they launched last year
as the high-dividend and low-volatility trends began to gather
heads of steam.
Indeed, SPLV and HDV were neck-and-neck last year for the honors
of most successful product launches of 2011. SPLV is now a $2.48
billion ETF and HDV has assets of $2.23 billion.
SPHD comes to a space that is already well-populated by
heavyweights such as State Street Global Advisors' SPDR S&P
Dividend ETF (NYSEArca:SDY), which boasts more than $9.43 billion
in assets, as well as iShares' HDV.
While the SPHD does appear to offer something new, PowerShares
is no stranger to the high-dividend yield strategy.
The company already offers a roster of equity income strategies,
including the PowerShares High Yield Equity Dividend Achievers
Portfolio (NYSEArca:PEY) and the KBW High Dividend Yield Financial
Portfolio (NYSEArca:KBWD), but the new fund will be the cheapest by
The $300 million PEY costs 0.60 percent and KBWD has a 1.32
percent expense ratio, which includes acquired fund fees of 0.95
The selection process begins with picking the 75
highest-dividend-paying names from the S&P 500, and then
narrows down to the 50 stocks that showed the lowest realized
volatility in the previous 12 months, according to SPHD's
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