Right Place, Right Time For New Dividend ETF
August 9th 2013 at 12:00pm by Tom Lydon
Not all new exchange traded funds are the beneficiaries of good timing, but one recently launched fund is. The ALPS International Sector Dividend Dogs ETF (NYSEArca: IDOG) debuted in late in June and has proceeded to gain 7.2% since then.
Although IDOG is a dividend ETF, certainly a rewarding corner of the ETF universe this year for issuers and investors alike, that is not the only reason the fund has performed well right out of the gate. Like its successful cousin, the ALPS Sector Dividend Dogs ETF (NYSEArca: SDOG), IDOG focuses on high-yield stocks, but again, that is not the only reason the fund has thrived. [Global Stocks Get Their Dividend Dog ETF]
IDOG’s country mix is a big reason for the new ETF’s success and that sentiment extends beyond the fund’s 18.2% allocation to Japan. Japanese stocks have actually been a drag on IDOG because the yen has gained strength over the past six weeks. Since IDOG debuted, the iShares MSCI Japan ETF (NYSEArca: EWJ) is lower by 6%.
It has been previously left-for-dead European markets that have sent IDOG to the upside. Japan, the U.K. and Australia account for about 40% of the fund’s country weight, but the real upside has been generated by Eurozone nations. Not many ETFs feature an almost 10% weight to AAA-rated Finaland, but IDOG does and that has helped as Finnish stocks have rallied in the past month. [The Good and the Bad of the Finland ETF]
In the past 90 days, the major single-country ETFs tracking France, Germany, the Netherlands, Spain and Switzerland are up an average of 5.9%. Those countries combine for a quarter of IDOG’s weight. All told, IDOG features exposure to nine Eurozone ETFs of which seven have corresponding ETFs. All seven are higher in the past three months. [A Developed Market ETF Gem in a Quiet Rally]
“IDOG isolates the S-Net International Developed Markets Index (ex-Americas) constituents with the highest dividend yield in their respective sectors providing the potential for price appreciation as market forces bring their yield into line with the overall market,” according to ALPS. The fund also uses an equal-weight approach at the sector level with the 10 Global Industry Classification Standard (GICS) sectors each receiving allocations of around 10%.
IDOG’s holdings include Daimler, French oil giant Total (NYSE: TOT), Banco Santander (NYSE: SAN), ArcelorMittal (NYSE: MT) and Italian oil producer (NYSE: ENI). The fund’s expense ratio is 0.5% per year.
ETF Trends editorial team contributed to this post.
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