The Claymore/Zacks Dividend Rotation (IRO) exchange traded fund (ETF) began trading this week, and it brings a new level of complexity to dividend ETFs. IRO tracks the Zacks Dividend Rotation Index, which is a domestic index designed to maximize dividend income at the lowest possible tax rate. The index’s 100 components are divided into two subindexes of 50 components that are rebalanced monthly on an alternating basis. The selected 50 components are then weighted based on yield and liquidity, says Heather Bell for Index Universe. In addition to maximizing dividend income, the index is also designed to select stocks that will outperform other benchmark indexes, including the Dow Jones Select U.S. Dividend Index specifically.

It comes as no surprise that there’s an ETF that tracks the Dow Jones Select U.S. Dividend Index: the iShares Dow Jones Select Dividend Index (DVY). The biggest difference IRO has over DVY is that every month, half of the IRO’s index is eligible for replacement. By contrast, the DVY’s index is reviewed annually. However, DVY’s advantage is that its expense ratio is 0.4%, which is 20 basis points cheaper than IRO’s.