ETF issuers continue to add new twists to old themes with respect to their fresh product launches. ETF leader Vanguard, “vampire squid” investment bank Goldman Sachs and ETF creator State Street all released new funds in the past few weeks. These new funds all use smart-beta ideals to re-dice and re-index previously common themes. In this case, it’s developed-market stocks from around the world.
Applying Dividends to International Stocks With Vanguard
The Vanguard Dividend Growth (VIG ) and Vanguard High-Yield Dividend (VYM ) ETFs are already two of the most popular products on the market with just over $30 billion in combined assets. However, the pair only focus on U.S. stocks. To fill that international gap, Vanguard introduced the Vanguard International Dividend Appreciation ETF (VIGI ) and Vanguard International High Dividend Yield ETF (VYMI ) on February 25.
Like their domestic counterparts, VIGI and VYMI will track indexes of companies that steadily increase their dividends and that have higher than average yields. VIGI tracks the Nasdaq International Dividend Achievers Select Index and VYMI tracks the FTSE All-World ex-U.S. High Dividend Yield Index. These indexes take the previous VIG and VYM approaches and apply them to international stocks.
This international exposure includes both developed-market nations as well as emerging markets. That broader mandate to include emerging markets like India and China makes the funds unique and potentially a one-stop-shop for investors looking to add international dividends to their portfolio. That should help them garner assets and trading volumes rather quickly.
Expenses for VIGI run at 0.25%, or $25 per $10,000 invested, while VYMI charges 0.30% for the year.
Goldman Sachs Gets Fundamental
Investment bank and asset manager Goldman Sachs has been making a name for itself in the world of ETFs with a series of smart-beta launches that are actually “smart.” Its newest launches are the Goldman Sachs ActiveBeta Europe Equity ETF (GSEU ) and the Goldman Sachs ActiveBeta Japan Equity ETF (GSJY )
Launched on March 2, GSEU and GSJY will track proprietary smart-beta indexes: the Goldman Sachs ActiveBeta European Equity Index and the Goldman Sachs ActiveBeta Japan Equity Index, respectively. These indexes will screen their respective regions for stocks that exhibit four distinct performance attributes that Goldman believes lead to outperformance over the long haul. These include value, strong momentum, high-quality and low-volatility fundamentals. This follows a similar approach that Goldman has used to launch funds relating to U.S. stocks.
Expenses for GSEU and GSJY both run at a cheap 0.25% per year.
A Quirky Socially Responsible Fund From State Street
Launching on March 7, right before International Women’s Day, State Street’s SPDR SSGA Gender Diversity Index ETF (SHE ) is an interesting foray into the word of socially responsible (SRI) or ESG investing. SRI has been gaining traction as many investors have been looking for ways to align their beliefs with their portfolios. While many SRI funds eliminate undesirable stocks based on certain criteria, such as firearms or tobacco production, SHE takes a slightly different approach.
The ETF will track the SSGA Gender Diversity Index. The benchmark is a measure of large-cap U.S. stocks that are considered gender-diverse. That means SHE’s underlying portfolio of stocks will have greater gender diversity in their senior leadership positions. Basically, there’s more women and transgender people sitting in their boardrooms.
Recent academic research shows that firms run by women or that have a greater number of women in senior positions perform slightly better than their counterparts on both return on equity as well as stock market returns.
SHE hopes to not only profit from this fact, but allow investors to support those firms that have a high impact on women’s rights. State Street will donate a portion of the ETF’s revenue to organizations that sponsor educational programs to remove bias and empower women in business roles. The ETF’s launch follows other SRI funds targeting the LGBT and disabled communities.
The expense ratio for SHE is just 0.20%.