Charles Schwab has launched its own dividend exchange traded fund as investors continue to buy equity-income ETFs at a rapid pace.
On a call with reporters Friday, Schwab’s head of proprietary investment product management John Sturiale said there is “definitely a demand for yield in the market” with 10-year Treasury yields hovering around 2%.
“This is a good time to be offering yield to investors,” he said. “We think we’ll see some good demand in the fund.”
Schwab U.S. Dividend Equity ETF (NYSEArca: SCHD) tracks the Dow Jones U.S. Dividend 100 Index. This index is made up of companies that have a record of paying high dividends and have fundamental strength relative to their peers. The index is reviewed annually and revised quarterly.
The new dividend ETF’s strategy looks at the financial strength of the company as well as the dividend yield, while also preventing overconcentration in the utilities and financial sectors, John Sturiale said.