An Active Guru ETF with a Dividend Focus
August 15th, 2014 at 9:30am by Tom Lydon
A recently launched active high-dividend exchange traded fund tries to generate outsized returns through focusing on so-called high-conviction stock picks from among the top fund managers while screening for attractive dividends.
The AdvisorShares Athena High Dividend ETF (NYSEArca: DIVI), which was launched on July 29 and is managed by Dr. Thomas Howard of AthenaInvest Advisors, utilizes behavioral finance to identify component stocks. [AdvisorShares Introduces New High Dividend ETFs]
While the ETF is new, Howard reportedly generated annualized returns of 29.2% over the past five years ended April 30 in his aggressive growth portfolio, writes Charles Sizemore for Forbes.
DIVI selects stocks that are held in the top relative weight positions by active fund investment managers, screens for high dividend securities and allocates by dividend weights.
Compared to other large index-based dividend ETFs, DIVI has a global reach, including exposure to U.S., developed international and emerging market equities, and states that “global diversification” is part of its mandate.
Additionally, compared to other broad dividend ETFs, DIVI also includes real estate investment trusts, mortgage REITs, master limited partnerships, closed-end funds and business development companies, which are all known for their attractive yields.
Lastly, DIVI employs a type of guru-following strategy where the manager selects high conviction stocks of active mutual fund managers, and then screens for attractive dividend payers. [A Gorgeous Guru ETF]
However, potential investors should be aware that the fund is new and only has about $2.4 million in assets under management. So, traders should use limit orders to help better execute positions.
Moreover, the ETF shows a 0.99% expense ratio, which is more expensive than your average ETF, but not excessive for an actively managed ETF.
For more information on dividend stocks, visit our dividend ETFs category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.