Low volatility and dividend yields have been two prevailing themes among gun-shy investors in the current market environment. Invesco PowerShares seeks to fulfill the two needs with its new high dividend portfolio exchange traded fund.
According to a press release, the PowerShares S&P 500 High Dividend Portfolio (SPHD), which tries to reflect the performance of the S&P Low Volatility High Dividend Index, will begin trading on Thursday, October 18.
The underlying index tracks 50 stocks taken from the S&P 500 index that have historically provided high yields and exhibited lower relative volatility. The index also has a modified cap-weighting methodology that weights securities based on dividend yields.
“The PowerShares S&P 500 High Dividend Portfolio combines two key objectives that are important to many investors today: an emphasis on high dividend equities with the well-documented benefits of low-volatility securities,” Ben Fulton, Invesco PowerShares managing director of global ETFs, said in the press release. “The fund’s underlying index is designed to perform well in absolute terms and on a risk-adjusted basis compare to the S&P 500 index, and had an average dividend yield of 4.51% as of Sept. 30, 2012.”
In comparison, the S&P 500 currently yields about 2.11%.
The new ETF is the latest in the fund provider’s line of factor-based, “intelligent” beta ETF products. These products provide actively managed strategies in a passive indexing structure by customizing the underlying indices based on factor tilts, like low volatility, high beta, high quality, relative strength and high dividends.
Invesco PowerShares says it has $3.7 billion in its factor-driven ETFs.