Dividend ETF On Steroids: Global X Debuts “SuperDividend” Fund

by on June 9, 2011 | ETFs Mentioned:

Global X added another product to a growing lineup of ETFs focusing on dividend-paying equities on Thursday, rolling out its SuperDividend ETF (SDIV). The new fund, the 35th from the New York-based issuer, will seek to replicate the Solactive Global SuperDividend Index. That benchmark is equal-weighted, and includes 100 high-yielding equities from nearly two dozen emerging and developing economies.

The U.S. accounts for about 32% of the new dividend ETF, followed by Australia (24%), Britain (10%), and Canada (6%). The underlying index will be rebalanced semi-annually. From a sector perspective, SDIV’s holdings will be spread across various corners of the global economy: REITs (22%), consumer discretionary (16%), and telecom (16%) account for the largest allocations, followed by financial services firms, utilities, and banks.

Dividend ETFs In Focus

ETFs offering exposure to dividend-paying companies have become tremendously popular over the last several years, thanks in part to the low interest rate environment that has forced yield-hungry investors to look beyond fixed income securities. There are dozens of ETFs that are linked to either dividend-weighted benchmarks (many of them WisdomTree products) or to indexes that screen components by dividend yield and/or history of consistent distributions [How To Find The Right Dividend ETF].

Most of the existing dividend ETFs focus only on U.S. or international equities, making the new Global X fund somewhat unique. Other dividend ETFs in the Global Equities ETFdb Category include the WisdomTree Global Equity Income Fund (DEW) and First Trust Dow Jones Global Select Dividend Fund (FGD) [compare these two ETFs head-to-head].

SDIV is also the only dividend-focused ETF on the market that employs an equal-weighted methodology, a technique that has attracted the attention of investors in recent years as a result of impressive performance relative to cap-weighted alternatives. ETFs linked to market capitalization-weighted benchmarks may have a tendency to overweight overvalued stocks and underweight undervalued ones, potentially creating a drag on return [see For ETF Investors, The Details Matter].

“In an environment where people are seeking monthly income, the SuperDividend ETF offers convenient access to 100 high yielding companies around the globe through one security,” said Bruno del Ama, chief executive officer of Global X Funds. “We are very proud of bringing to market our most innovative addition to our suite of income generating funds.”

SDIV will charge a management fee of 0.58%. Including acquired fund fees related to the expenses charged by Business Development Companies (BDCs) in which the fund invests, the all-in expense ratio works out to 0.79%.

[For more on the new SuperDividend ETF, see the SDIV fact sheet. For updates and analysis on all new ETFs, see the ETF Launch Center]

Disclosure: No positions at time of writing.