Xtrackers has launched three new dividend ETFs that include a quality filter as part of the securities selection process.
The Xtrackers Morningstar US Quality Dividend UCITS ETF, the Xtrackers Morningstar Global Quality Dividend UCITS ETF and the Xtrackers MSCI World High Dividend Yield UCITS ETF have listed on the Deutsche Börse and the London Stock Exchange.
DWS writes that all utilise quality screening to tilt towards securities with attractive fundamentals as well as sustainably high dividends.
For example, the index methodology for the Xtrackers MSCI World High Dividend Yield UCITS ETF screens out stocks with weak fundamentals based on return-on-equity, earnings variability and debt-to-equity, while also filtering out stocks with a negative or extremely high pay-out ratio and stocks that do not have a track record of persistent dividend payments.
The two Xtrackers ETFs tracking Morningstar indices take a different approach, utilising proprietary Morningstar analysis based on the firm’s Economic Moat research methodology, which aims to build a picture of the fundamental health of a company inclusive of intangible factors such as brand impact, as well as other factors. The Morningstar quality screening therefore aims to look beyond accounting metrics.
In February the reference benchmark of the db x-trackers Euro Stoxx Select Dividend 30 UCITS ETF (DR) was changed to track a quality index, with the name of the ETF changing to the Xtrackers Euro Stoxx Quality Dividend UCITS ETF.
“We want to provide our clients with a sophisticated range of high quality income-oriented ETFs. The approach that most of our income-oriented ETFs now take, focusing on quality screening based on fundamentals and dividend sustainability, can bring a number of benefits, including lower metrics for volatility and maximum drawdown thanks to weighting in favour of more defensive stocks,” says Michael Mohr, Director, ETF Product Development.
