Positive correlation to Treasury yields and sector neutrality may help protect investors’ returns in rising rate environments, when high-yielding stocks and sectors tend to underperform
The underlying index employs a multi-factor approach:
– including a 63% weight toward companies with higher dividend yields, and smaller 13.5% to avoid firms with payouts that are too high and might be cut in the future, 13.5% to those expected to grow dividends in the future and 10% to firms that perform better with rising rates.
– takes into account not just dividend yield, dividend growth and dividend payout ratio, but also adds in correlation to the 10-year treasury rate