“The combination of such investments is intended to isolate the growth of the level of the dividends expected to be paid … while at the same time attempting to minimize the impact of changes in the trading price of such securities,” according to the filing.
Reality Shares posits that a company’s earnings provide a better measure of the company’s potential long-term value, compared to the price of the stock. Additionally, investment research has indicated that the level of dividends paid has been highly correlated to the level of corporate earnings. Consequently, Reality Shares believes that isolating the dividend from the stock price can generate positive long-term returns that are uncorrelated to broad equity and fixed-income returns.
“Unlike more traditional funds, the Fund seeks investment returns based on the growth of the level of the dividends expected to be paid on the securities … not the change of the stock price of such companies,” according to the filing.
For more information on dividend funds, visit our dividend ETFs category.
Max Chen contributed to this article.