As the universe of dividend exchange traded funds expands, new funds are offering increasingly tactical approaches.
One new dividend ETF, the WisdomTree International Hedged Dividend Growth Fund (NYSEArca: IHDG), is a combination play on two themes that have soared to prominence in recent years: Dividend growth and currency hedging.
IHDG, which carries an annual expense ratio of 0.58%, will track the WisdomTree International Hedged Dividend Growth Index (WTIDGH). The fund is just a week old, but its age should not be a deterrent to investors. Especially not when the possibility of a stronger U.S. dollar is rising. [Dollar ETFs Could Surge]
The WisdomTree International Hedged Dividend Growth Index had a dividend yield of 3.14% as of May 5, affirming the notion that higher yields are often available on foreign stocks than U.S. equivalents.
That solid yield comes by way of a country lineup that includes a combined 35% weight to the U.K. and Australia. Australian dividends are expected to grow this year after firms there paid $40.3 billion in dividends last year. [Remember Australian Dividends]
U.K. dividend growth has been impressive as well. British listed companies paid $102. 1 billion in dividends last year, and since 2009 have paid roughly $441 billion,” according to the Independent.
Overall, IHDG has exposure to 20 currencies with 12 different currencies. Nearly a quarter of the new ETF’s country weight goes to Eurozone nations, underscoring the fund’s utility as a winner if and when the euro declines. [ETFs for ECB Easing]
Alone, that is a vital point because European equities have historically performed best when the region’s currencies are falling and it is widely expected that the European Central Bank will soon engage in quantitative easing.