As the Federal Reserve looks to normalize interest rates ahead, income-minded investors may consider an alternative dividend exchange traded fund strategy to reduce the noise of the market and diminish price volatility.
On the upcoming webcast, ETF Bond Alternative with No Rate Risk, Eric Ervin, President and CEO of Reality Shares, and Jay Batcha, Founder and Chief Investment Officer of Optimal Capital, will outline a relatively new approach to dividend investments through isolating and accessing the dividend growth rate.
For instance, the Reality Shares DIVS ETF (NYSEArca: DIVY) may provide low volatility and low correlation as a suitable alternative to traditional fixed income and equity exposure.
DIVY is not your traditional dividend ETF strategy. The actively managed fund looks to capture dividend growth via an array of strategies in an effort to generate long-term capital appreciation. DIVY’s holdings can include listed option contracts, dividend swaps, futures and forwards on indexes of Large Cap Securities or exchange traded funds designed to track large cap securities indexes.
The active ETF can purchase index options contracts in an effort to adapt to changes in the expected dividend values reflected in the option prices. These option combinations are designed to reflect expected dividend values and eliminate the Fund’s exposure to changes in the trading prices of the Large Cap Securities.
[related_stories]Unlike currently available dividend focused products, DIVY does not seek to produce returns based on changes in the stock market price of a portfolio of dividend-paying securities and does not generate dividend income. The ETF’s holdings are usually comprised of call and put options on major indexes such as the S&P 500 and the Nasdaq-100.
While DIVY is not a traditional dividend ETF, its strategy does help investors access the positive effects of a stock’s dividend growth rather than focusing on simple share price movements to produce solid long-term results.
Financial advisors who are interested in learning more about the dividend strategy can register for the Tuesday, November 8 webcast here.
Reality Shares DIVS ETF