The pace of new ETF introductions has picked up in recent
weeks, though as the industry matures, it is reasonable to expect
that the days of hundreds of new funds debuting in a year may
have already passed.
That does not mean investors have slim pickings among viable,
. Actually, the opposite is true.
Even when confining the search to those funds that are less
than a year old, investors looking to enjoy the infancy of some
ETFs have plenty of nifty choices. Importantly, the roster of
compelling new ETFs includes plenty of
rookie dividend funds that are worth a look
Investors in the market for a new ETF should remember there is
no empirical evidence to suggest new ETFs are slack performers or
riskier than the more seasoned equivalents. They should also
consider the following new ETFs.
FlexShares Quality Dividend Index Fund (NYSE:
) In late 2012, Northern Trust's (NASDAQ:
) FlexShares unit rolled out a
three-ETF suite of new dividend funds
, of which QDF was a member. The fund is off to a decent start
with nearly $48 million in assets under management since its
More importantly, QDF has returned nearly 11 percent since it
came to market and the weighted average dividend yield of 3.44
percent is decent among ETFs with heavy emphasis on U.S.
large-caps. QDF tracks the Northern Trust Quality Dividend Index,
which goes beyond cap-weighting to select companies "based on
expected dividend payment and fundamental factors such as
profitability, solid management, and reliable cash flow,"
according to the issuer
QDF's top-10 holdings include Exxon Mobil (NYSE:
), Chevron (NYSE:
) and Pfizer (NYSE:
). The annual expense ratio is 0.37 percent.
PowerShares S&P MidCap Low Volatility Portfolio (NYSE:
) Looking to capitalize on the success of the PowerShares S&P
500 Low Volatility Portfolio (NYSE:
), PowerShares rolled out mid- and small-cap equivalents in
February. XMLV is the mid-cap answer to SPLV and the ETF is off
to a fine start with a gain of just over five percent.
Low volatility ETFs are popular, the inflow data highlight as
much, but they are not all the same. Investors might expect XMLV
to be heavy on consumer staples and utilities just like SPLV is.
Indeed, XMLV has a 24.3 percent weight to utilities, but
financials dominate this new ETF with an allocation of 51.3
percent. The staples sector is merely the sixth-largest sector
weight in XMLV at a mere 4.4 percent.
Investors should also note XMLV allocates about 23 percent of
its weight to small-caps. The performance potential is there.
Year-to-date, XMLV's underlying index, the S&P MidCap 400 Low
Volatility Index, has outpaced the S&P MidCap 400 and the
according to PowerShares data
No stock receives a weight of more than 1.78 percent. XMLV
holdings investors may already be familiar with include Church
& Dwight (NYSE:
), Tootsie Roll (NYSE:
) and Mercury General (NYSE:
). The new ETF has an expense ratio of 0.25 percent per year.
For more on ETFs, click
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