Specifically, the underlying index screens for equity securities with an above-average forecasted dividend yield and further scores components based on three fundamental value characteristics, including price to trailing 12-month diluted earnings from continuing operations ratio, price to trailing 12-month free cash flow and price to trailing 12-month sales ratio. The 50 companies with the largest dividend indicated yield are chosen as underlying holdings and are weighted by dividend yield.
Top holdings include Valero Energy Corp 5.5%, Kohls Corp 5.4%, General Mtrs 5.1%, AT&T 5.1% and Seagate Technology 5.1%.
“The last two years have seen factor investing gaining much traction in the indexing space with a growing number of investment products tracking factor-based indices,” Henning Kahre, Head of Research Solactive AG, said in a note. “The Solactive Power Factor™ High Dividend Index combines quality and valuation criteria. By using a multi-step selection process that accounts for differences at the sector level, the index methodology results in an index that is pretty robust in providing the targeted exposure.”
For more information on new fund products, visit our new ETFs category.