Absolute Shares Trust has added onto its WBI suite with its first smart-beta, index-based exchange traded fund that focuses on high dividend-yielding stocks.
On Wednesday, Absolute Shares launched the WBI Power Factor High Dividend ETF (NYSEArca: WBIY). WBIY has a 0.67% gross expense ratio.
“We’re introducing a smarter approach for yield starved investors at a time when the need for consistent capital growth and capital preservation is absolutely critical,” Don Schreiber, founder and CEO of WBI and co-author of All About Dividend Investing (McGraw Hill 2011), said in a note. “As investors rush into the high-yield dividend space, we feel that WBIY will provide them with a smarter approach that pairs the search for high yielding stocks with a preference for only those companies with the strongest fundamentals.”
The Power Factor High Dividend ETF will try to reflect the performance of the Solactive Power Factor High Dividend Index, which selects securities from the broader Solactive US Broad Market Index that exhibit certain yield and fundamental value characteristics.
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.