AdvisorShares, the pioneer in the actively managed ETF space, having more than two dozen active ETFs under its umbrella, continues with its launch of innovative products.
The issuer has partnered with Denver-based AthenaInvest Advisors LLC – an industry leader in Behavioral Portfolio Management (BPM) to launch its newest product. The product – AdvisorShares Athena High Dividend ETF – trades under the ticker DIVI providing investors with a new choice in the world of dividend ETFs.
DIVI in Focus
The fund doesn’t track any specific benchmark but rather uses AthenaInvest’s patented behavioral research to generate long-term capital appreciation. The research first measures behavioral factors of active equity managers including manager behavior, strategy consistency and conviction to identify stocks held in the top relative weight positions of their portfolio.
Stocks are then screened to filter out high dividend yielding securities to form a dividend-weighted investment portfolio. The fund uses sector, strategy and country diversification to reduce overall portfolio risk (read: Dividend ETFs Explained: What Investors Need to Know).
DIVI invests in both U.S. and foreign stocks. Currently, the fund holds 40 stocks with Prospect Capital Corp, Telefonica Brasil-ADR and Chimera Investment Corp occupying the top three positions, each having a roughly 4% exposure.
Sector-wise, equity REITs, mortgage REITs, master limited partnerships (MLPs), closed-end funds and business development companies (BDCs) form part of the fund’s investment universe.
However, the fund’s active management approach renders it as slightly costly with 99 basis points as the annual fee.
How does it fit in a portfolio?
The new product appears to be an interesting choice for investors seeking exposure to global high dividend paying stocks in the present low interest rate environment. The fund’s strategy of selecting high-dividend stocks held by the best managers is noteworthy (read: 3 Excellent Dividend ETFs for Growth and Income).
Investors should take note that dividends provide a steady stream of income and have accounted for more than 40% of total market returns over the past eight decades. Moreover, dividend paying companies are also comparatively less volatile and more mature with solid cash flows and thus provide greater stability. Also, the fund is expected to provide global diversification to a portfolio.
While the ETF’s use of behavioral research to select stocks certainly differentiates it from the crowd, it is by no means the only dividend-focused global market ETF out there. There are actually a handful of other products already in the space; so it might be difficult for DIVI to build assets initially (see 3 Excellent ETFs for Growing Dividends).
Global X SuperDividend ETF (SDIV - Free Report) is quite popular in the space with an AUM of $1.1 billion and an expense ratio of 58 basis points. The fund has an attractive dividend yield of 6.4% and has gained 12% this year.
Another product SPDR S&P International Dividend ETF (DWX - Free Report) has also managed to gain popularity by accumulating an asset base of $1.5 billion since inception. The fund tracks the S&P International Dividend Opportunities Index to provide exposure to dividend paying stocks on a global basis. The fund has a good dividend yield of 5.33% and charges 45 basis points as expenses
Another ETF Guggenheim S&P Global Dividend Opportunities Index ETF (LVL - Free Report) having an asset base of $103.3 million provides exposure to high yielding global stocks. The fund has a dividend yield of 5.28% and charges 90 basis points as fees (read: 3 Global ETFs to Earn Higher Yields).
Hence, DIVI might face competition from other well established players in this space. More so because the product is the costliest among the three of the above mentioned ETFs.
As a result of this, the new product might only be able to build assets if it manages to generate a higher yield and performance than the existing products by using its unique behavioral research strategy to deliver solid returns.
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