Most exchange traded funds that are slate for closure ultimately meet that fate, but once in a while, an issuer decides to give new life to a product previously slated for closure. That is happening for the AdvisorShares Athena High Dividend ETF (NYSEArca: DIVI).
AdvisorShares, one of the largest issuers of actively managed ETFs, will keep DIVI open, according to a statement issued on March 16. The ETF was originally slated to be liquidated on March 13.
“While our original intention was to close DIVI, we have elected to keep the ETF open,” said Noah Hamman, chief executive officer of AdvisorShares, in the statement.
According to AdvisorShares, the high-dividend focus may also help diminish the potential issue of portfolio devaluation in periods of rising interest rates and achieve capital growth, which can hedge against inflation with growing income and growing capital. The strategy may be beneficial in the year ahead, as President Donald Trump’s economic policies could fuel inflation and the Federal Reserve looks to hike interest rates in an attempt to head off an overheating economy.
DIVI takes an interesting approach to dividend stocks, selecting all manner of yield generating equities that have already been vetted by active mutual fund managers. DIVI is a global ETF, though nearly 80% of its holdings are U.S. companies.
“DIVI offers the opportunity for higher dividend income, with less principal than traditional fixed income options in a low-interest rate environment. Investors may also mitigate the potential issue of portfolio devaluation in a rising interest rate environment,” according to AdvisorShares.
DIVI holds 37 stocks and has an indicated yield of 6.75%.
The ETF debuted in July 2014 and is managed by Denver-based AthenaInvest Advisors. Athena is an “industry leader in Behavioral Portfolio Management (BPM) with its patented behavioral research process and proprietary investment strategies. Dr. C. Thomas Howard, PhD, co-founder and chief investment officer of Athena, serves as the portfolio manager of DIVI,” according to statement issued by AdvisorShares.
For more information on active strategies, visit our actively managed ETFs category.