The year 2022 as a whole could easily be attributed to the Russia-Ukraine war, red-hot inflation and rising-rate worries. No wonder, such worries caused an upheaval in the market this year. Wall Street slid in three quarters in a row.
Overall, the S&P 500 is down 25% this year. The Nasdaq Composite is off 30.9%, the Dow Jones has lost about 18.8% while the Russell 2000 has skidded 23.9% year to date (as of Oct 3, 2022) on rising rate worries.
Against this backdrop, dividend or high-income ETFs are currently in high demand. As a result, we have seen the launch of John Hancock U.S. High Dividend ETF (JHDV) and Altrius Global Dividend ETF (DIVD) lately.
JHDV in Focus
This fund is actively managed; it does not track an index. The net expense ratio of JHDV is 0.34%.
DIVD in Focus
The investment seeks long-term capital growth of capital and income. To pursue its objective, the fund will invest at least 90% of its net assets, plus the amount of any borrowings for investment purposes, in dividend-paying equity securities. The fund charges 49 bps in fees.
How Do These Fit In a Portfolio?
The Fed has been super-hawkish this year. With the Fed looking to hike rates further to cool down scorching inflation, market volatility is prevailing at quite a high level. The median Federal Funds rates are now projected to be 4.4% for 2022 (from 3.4% projected in June). For 2023, the same is projected to be 4.6% (from 3.8% in June) and for 2024, the same is projected to be 3.9% (from 3.4% in 2024).
No wonder, demand for dividend ETFs is high right now as these act as a great safety. Investors may be interested in equities or products that have the potential to offer capital appreciation as well as benchmark-beating yields. After all, dividends are one of the ways to ride out the turbulent times.
Even if the stock or the fund falls, higher current income would go a long way in protecting investors’ total returns. After all, high-dividend ETFs provide investors avenues to make up for capital losses, if that happens at all.
Competition
The space is jam-packed with products. However, many of high-AUM ETFs in the space is passively-managed. JHDV’s active nature may help it to stand out in the crowd. Overall, global dividend ETFs’ space is headed by (in terms of assets) Vanguard International Dividend Appreciation ETF (VIGI - Free Report) , which charges 15 bps in fees.
U.S. dividend ETFs’ space is headed by the likes of Vanguard Dividend Appreciation ETF (VIG - Free Report) , Vanguard High Dividend Yield Index ETF (VYM - Free Report) and Schwab US Dividend Equity ETF (SCHD - Free Report) . Each of these funds charges 6 bps in fees. Hence, newbies may find it tough to amass assets due to their high expense ratios.
(NOTE: We are reissuing this article to correct a mistake. The original version, published on Oct 7, 2022, should no longer be relied upon.)
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The year 2022 as a whole could easily be attributed to the Russia-Ukraine war, red-hot inflation and rising-rate worries. No wonder, such worries caused an upheaval in the market this year. Wall Street slid in three quarters in a row.
Overall, the S&P 500 is down 25% this year. The Nasdaq Composite is off 30.9%, the Dow Jones has lost about 18.8% while the Russell 2000 has skidded 23.9% year to date (as of Oct 3, 2022) on rising rate worries.
Against this backdrop, dividend or high-income ETFs are currently in high demand. As a result, we have seen the launch of John Hancock U.S. High Dividend ETF (JHDV) and Altrius Global Dividend ETF (DIVD) lately.
JHDV in Focus
This fund is actively managed; it does not track an index. The net expense ratio of JHDV is 0.34%.
DIVD in Focus
The investment seeks long-term capital growth of capital and income. To pursue its objective, the fund will invest at least 90% of its net assets, plus the amount of any borrowings for investment purposes, in dividend-paying equity securities. The fund charges 49 bps in fees.
How Do These Fit In a Portfolio?
The Fed has been super-hawkish this year. With the Fed looking to hike rates further to cool down scorching inflation, market volatility is prevailing at quite a high level. The median Federal Funds rates are now projected to be 4.4% for 2022 (from 3.4% projected in June). For 2023, the same is projected to be 4.6% (from 3.8% in June) and for 2024, the same is projected to be 3.9% (from 3.4% in 2024).
No wonder, demand for dividend ETFs is high right now as these act as a great safety. Investors may be interested in equities or products that have the potential to offer capital appreciation as well as benchmark-beating yields. After all, dividends are one of the ways to ride out the turbulent times.
Even if the stock or the fund falls, higher current income would go a long way in protecting investors’ total returns. After all, high-dividend ETFs provide investors avenues to make up for capital losses, if that happens at all.
Competition
The space is jam-packed with products. However, many of high-AUM ETFs in the space is passively-managed. JHDV’s active nature may help it to stand out in the crowd. Overall, global dividend ETFs’ space is headed by (in terms of assets) Vanguard International Dividend Appreciation ETF (VIGI - Free Report) , which charges 15 bps in fees.
U.S. dividend ETFs’ space is headed by the likes of Vanguard Dividend Appreciation ETF (VIG - Free Report) , Vanguard High Dividend Yield Index ETF (VYM - Free Report) and Schwab US Dividend Equity ETF (SCHD - Free Report) . Each of these funds charges 6 bps in fees. Hence, newbies may find it tough to amass assets due to their high expense ratios.
(NOTE: We are reissuing this article to correct a mistake. The original version, published on Oct 7, 2022, should no longer be relied upon.)
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>
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