WisdomTree, the publicly traded ETF company known for its
fundamental indexes, is expanding its family of dividend-focused
with the planned launch Wednesday of a payout fund that hones in on
U.S. companies that show good dividend-growth prospects.
The WisdomTree U.S. Dividend Growth Fund (NasdaqGM:DGRW) is one
of two U.S.-focused dividend ETFs that the firm has recently put in
the regulatory pipeline. The other is a similar strategy focused on
small-cap companies that remains in registration.
DGRW will track a fundamentally weighted index consisting of
about 300 dividend-paying stocks that show the best combined rank
of growth and quality factors as measured by long-term
earnings-growth expectations, return on equity and return on
assets, according to the prospectus. The fund will cost 0.28
percent a year, or $28 for every $10,000 invested.
WisdomTree's latest ETF will join a roster of at least 30 other
U.S. dividend-focused funds, all of which seek to slice and dice
the segment of dividend-paying stocks to find sources of income for
investors currently grappling with paltry yields in much of the
traditional fixed-income space.
Funds like the Vanguard Dividend Appreciation ETF (NYSEArca:VIG)
and the PowerShares Dividend Achievers (NYSEArca:PFM), for
instance, have resonated with investors. These ETFs, too, look to
invest in companies that have a history of increasing dividends
over time, and VIG has seen net inflows of more than $2 billion so
far this year, putting total assets at $15.3 billion. PFM now has
some $300 million in assets.
Turning to dividend-paying equities as a yield-replacement
strategy continues to be a major investment theme in 2013.
Investors have poured more than $60 billion into dividend-focused
funds in the past year ended March, with the bulk of those assets
going into U.S.-focused strategies.
WisdomTree itself is no stranger to success in the realm of
dividend ETFs. Its WisdomTree Equity Income Fund (NYSEArca:DHS)-a
security that invests in companies with high-yielding dividends
also selected from the broad WisdomTree Dividend Index that serves
as the securities pool for DGRW-has gathered nearly $700 million in
assets. The firm's dividend ex-financials portfolio 'DTN' has more
than $1.13 billion.
To be eligible for DGRW, securities must have paid regular
dividends for 12 consecutive months and have a market
capitalization of at least $2 billion. What's more, individual
security weighting is capped at 5 percent, with sector allocations
capped at 20 percent to ensure diversification, the prospectus
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