ProShares, the Maryland-based largest US provider of alternative exchange-traded funds, recently expanded its line-up of non-inverse and non-leveraged ETFs with the launch of the ProShares MSCI EAFE Dividend Growers ETF (EAFD).
The new passively-managed income-oriented fund invests in developed-market stocks that have a solid history of growing dividend payouts, thus potentially offering investors another option to boost returns in a low yield environment.
EAFD tracks the MSCI EAFE Dividend Masters Index, an index that incorporates minimum 40 members from the MSCI EAFE Index and that have increased their dividends for at least 10 straight years. The methodology involves equal-weighting the components while capping sector-exposure at 30 percent and country-exposure at 50 percent of the total index. The index is reconstituted each November and rebalanced four times annually; in February, May, August and November.
Britain gets the largest country weight with more than 47 percent allocation, followed by Switzerland, Australia, Denmark, Japan, Spain, Sweden, Germany, Belgium and Israel.
Research shows UK-domiciled companies paid $102.1 billion in dividends in 2013, which is about 11 percent of the $1.03 trillion global dividends paid last year.
Sector wise, consumer staples (22.12 percent), health care (21.21 percent), consumer discretionary (15.51 percent) and industrials (12.88 percent) all get double-digit allocations, while others are sporting the following percentages: Utilities (9.61 percent), materials (7.46 percent), energy (5.60 percent), financials (3.73 percent) and information technology (1.88 percent).
The new fund is likely to find favor with investors searching for yield and income as stocks that have a history of growing dividends look particularly appealing when 10-year treasury yields are hovering around 2.5 percent.
ProShares last October unveiled a similarly themed domestic dividend-growth ETF, the ProShares S&P 500 Aristocrats ETF (NOBL), which targets S&P 500 stocks that have at least a 25-year history of growing dividends. NOBL has achieved considerable success since inception, with assets under management topping $240 million.
EAFD has an annual expense ratio of 0.5 percent.
Disclosure: No holdingsContact Ulli