Low volatility, high dividends and the profitability and earnings to sustain dividend potential – that’s the three principles Legg Mason has set out to achieve in its low volatility suite of ETFs.
Today, Legg Mason Inc. added a third ETF to the suite – an emerging market version of its Low Volatility High Dividend ETF.
The Legg Mason Emerging Markets Low Volatility High Dividend ETF (BATS: LVHE) is an all-cap ETF composed of emerging market stocks and is benchmarked against the QS Emerging Markets Low Volatility High Dividend Hedged Index.
LVHE complements the Legg Mason Low Volatility High Dividend ETF (NASDAQ: LVHD) and the Legg Mason International Low Volatility High Dividend ETF (BATS: LVHI).
Both LVHI and LVHE employ currency hedging in attempts to further mitigate risk which may help during times of extreme market disruption.
“The Holy Grail for many investors has been to have their investments generate income while still achieving principal growth with enough stability to keep panic at bay when the market is turbulent. Today’s low yielding environment makes this harder to achieve but we believe a low volatility high dividend approach in emerging market equities can be part of the solution,” stated James Norman, President of QS Investors.
[related_stories]Emerging market equities can offer attractive investment opportunities due to faster economic growth and lower valuations than developed markets.
However, increasing concerns about geopolitical and macroeconomic risk and equity volatility make it important for strategies to seek to minimize downside risk.
The use of currency hedging attempts to further mitigate risk. Investors are also in search of sustainable high levels of income in a low income environment.
Higher yielding equities often come with higher risk. Incorporating a low volatility component can counter that risk while seeking to provide – growth and income – to meet investors’ needs.
Norman said these strategies are designed to benefit spenders who are looking for capital appreciation in their retirement years and savers who are in the wealth accumulation phase.
“When dividends are reinvested, they can lower risk and increase total annualized returns over time,” he said.
For more information on new fund products, visit our new ETFs category.