Global X Planning U.S. Version of SuperDividend ETF - ETF News And Commentary
November 06 2012 - 9:01AM
Zacks
Global X, the New York-based ETF issuer best known for its
international and high yield products, appears to be back in the
product lab again with a brand new SEC filing. However, unlike many
of its other ETFs currently on the market, this proposed product
will focus in on American securities instead.
This marks a shift for Global X, as the company has a lineup of
Chinese and Brazilian funds, various commodity ETFs that have
international exposure, and a number of other specialized products
as well. Still, the company has been trending somewhat back to the
American market with a few of its recent launches such as
GURU or MLPA, so the latest
American-centric filing shouldn’t be much of a surprise.
This is especially true given the focus of the product on yield,
an area that is continuing to attract investors in droves. For this
reason, Global X’s filing for the U.S. SuperDividend ETF
(DIV) seems like a logical step for the quickly growing
issuer (See Inside The SuperDividend ETF).
This proposed fund, if ever approved, would mark the third
‘Super’ ETF in the company’s lineup, further rounding out the
firm’s list of income-focused products. Unfortunately, many details
were not yet available so little is known about the product at this
time besides the proposed ticker symbol of DIV (read 11 Great
Dividend ETFs).
However, we do know that the ETF looks to track the INDXX
SuperDividend U.S. Low Volatility Index, equally weighting a group
of common stocks, MLPs, and REITs that rank among the highest
dividend yielding securities in the American market. Components are
also required to have paid dividends consistently over the past two
years while the index provider also looks to focus in on lower
volatility securities in order to given the fund a beta of less
than 1.0.
Undoubtedly Global X is hoping that this proposed product, if
ever approved, will mirror in success its original
SuperDividend ETF (SDIV). This product currently
has a yield of over 7.7% in 30-Day SEC terms and over $160 million
in total AUM (read Can You Beat These High Dividend ETFs?).
This is a pretty solid level of interest for this ETF,
especially considering the global focus, expense ratio above 0.5%,
and how fresh the ETF is to the market having made its debut in
June of 2011. It should also be noted that the product also takes
an equal weighted approach and focuses in on the highest yielders
form around the world—including the U.S.—so there will definitely
be some similarities between SDIV and a future DIV product.
However, the global dividend ETF market is by no means as
competitive as the domestic one, with the main foes to Global X
coming in the form of LVL and
DWX. The American market, on the other hand, has a
host of competitors not just in the broad dividend space, but in
high yield segments as well such as mREITs, MLPs, and preferred
stock.
Among these funds, the biggest competition will likely be the
$10+ billion dollar dividend giants of VIG,
DVY, and SDY (ok SDY has a little
less than ten billion in AUM). Beyond that, there are plenty of
other products that also promise high yields either by weighting
based on payments, yield levels, or a combination of the two (see
Invest Like the One Percent with These Three ETFs).
Clearly, DIV, if ever approved, will face a much more difficult
road than what SDIV saw for its quest to build up a big following.
However, if DIV can pass the regulatory hurdles and provide 7%+
yields like its international-focused cousin, it could manage to
carve out a decent niche among the more diversified U.S. income
products out there.
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(DIV): ETF Research Reports
ISHARS-DJ DVD (DVY): ETF Research Reports
GLBL-X SUPERDIV (SDIV): ETF Research Reports
SPDR-SP DIV ETF (SDY): ETF Research Reports
VANGD-DIV APPRC (VIG): ETF Research Reports
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