Dow Jones Indexes has licensed the Dow Jones EPAC Select Dividend Index to Barclays Global Investors to serve for the first time as the underlying basis for an exchange-traded fund, the iS
Dow Jones Indexes has licensed the Dow Jones EPAC Select Dividend Index to Barclays Global Investors to serve for the first time as the underlying basis for an exchange-traded fund, the iShares Dow Jones EPAC Select Dividend Index Fund, which is trading on NYSE Arca.
The new international dividend ETF, which has an expense ratio of 0.50 per cent, complements the iShares Dow Jones U.S. Select Dividend Index Fund, which was the first US dividend ETF to be listed in the that country and now has total assets under management of more than USD8.bn.
‘As investors increasingly seek income from their portfolios, they shouldn’t be limited by borders,’ said Noel Archard, head of iShares product development for Barclays Global Investors in the US. ‘By using a methodology similar to the U.S. Select Dividend Index Fund, this product enables investors to benefit from income-generating securities around the world.’
According to BGI, iShares funds are attractive to many individual and institutional investors and financial intermediaries because of their relative low cost, tax efficiency and trading flexibility, since ETF shares can be bought and sold through any brokerage firm, financial advisor or online broker, and can be held in any type of brokerage account. BGI is a leader in assets and products in ETFs through the iShares brand with more than 190 funds worldwide.
‘We have seen strong interest in our existing select dividend indexes for the US, the eurozone and Europe,’ says Michael A. Petronella, president of Dow Jones Indexes/Reprints. ‘We also have seen particular interest in the unique index concept that uses a combination of indicated annual dividend and dividend yield in order to determine the weightings of the components and countries within the index.
‘Licensing the Dow Jones EPAC Select Dividend Index as the basis of an ETF allows market participants to add leading dividend-paying companies in Europe, Asia, Australia and Canada to their portfolios.’
Launched in December 2005, the EPAC Select Dividend Index measures the performance in US dollar terms of the 100 highest dividend-paying non-US companies in developed markets currently including Canada, western Europe, Japan, Australia, Singapore and Hong Kong. Since its inception on December 5, 2005, the index has achieved an annualised return of 31.21 per cent.
To be included in the index, stocks must have a positive, three-year dividend-per-share growth rate, a dividend payout ratio of no more than 1.5 times the five-year average payout ratio of the Dow Jones country index to which it belongs, and a three-month average daily trading volume of at least USD3m.
For the weighting of the stocks, the index uses a combination of indicated annual dividend in order to determine component weights within each country, and dividend yield in order to determine country weights within the index. Eligible stocks are ranked in descending order by indicated annual dividend yield, with the top 100 components are selected for the index. Component weightings are capped at 10 per cent.
The EPAC Select Dividend Index complements the Dow Jones and Dow Jones Stoxx Select Dividend Index series, which consists of the Dow Jones U.S. Select Dividend Index, the Dow Jones Stoxx Global Select Dividend 100 Index, the Dow Jones Stoxx and Euro Stoxx Select Dividend 30 indices, the Dow Jones Stoxx Nordic Select Dividend 20 Index, the Dow Jones Stoxx EU Enlarged Select Dividend 15 Index, the Dow Jones Select Dividend indices for Asia, Asia/Pacific, Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden and the UK as well as the Dow Jones SWX Select Dividend 20 Index.
Dow Jones Indexes develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Best known for the Dow Jones Industrial Average, the firm is also co-owner of the Dow Jones Stoxx pan-European indexes, and with Wilshire Associates, provides the Dow Jones Wilshire Global Index family, which covers more than 12,000 securities in 59 markets. Dow Jones Indexes also maintains various alternative indexes, including measures of the hedge fund and commodity markets
