A Look At The Upcoming SmartX Dividend ETF

by on October 1, 2013

Investors have kicked off the trading week on a sour note as debt-ceiling worries have managed to resurface, serving as a reminder that politicians resolved the same drama last year by kicking the can down the road. With all eyes fixed on the potential government shutdown as the clock runs out, many have been left wondering whether this “dip” is a buying opportunity in disguise, or the start of a steeper correction on Wall Street [see 3 ETF Trades To Make Before The Congress Showdown].

With rates still stuck at record lows and stocks trading at all-time highs, investors continue to scour the landscape for attractive dividend opportunities. As such, below we profile a noteworthy filing  from Guinness Atkinson Funds, an issuer known for its actively managed mutual funds focused on alternative energy and Asia that is now looking to enter the ETF arena. 

SmartX Dividend ETF

In a recent SEC filing, Guinness Atkinson Asset Management outlined plans for the SmartX Nasdaq Quality Dividend Index ETF; this filing comes in as the follow-up to the firm’s exemptive relief request, necessary for running actively-managed ETFs, seen earlier this year. According to the SEC filing, the proposed ETF from Guinness Atkinson will be linked to the Nasdaq Quality Dividend Index, which is comprised of companies that meet a number of requirements regarding cash flow return on invested capital, dividend payment history, and debt-to-equity [see 101 High Yielding ETFs For Every Dividend Investor].

Digging deeper, the fund filing highlights some of the specific criteria on which potential candidates will be evaluated, including:

  1. Return on invested capital of at least 10% for each of the previous 10 years.
  2. Market capitalization of at least $1 billion.
  3. History of regular dividend payments.
  4. Debt-to-Equity ratio of less than 1.

The filing also mentions that the underlying portfolio will be equal-weighted and rebalanced on a quarterly basis, while the index itself will be reconstituted on an annual basis, based on the previous 10-year history [see our Monthly Dividends ETFdb Portfolio].

Lastly, this is expected to be a global ETF with exposure to companies domiciled and traded in the United States and a variety of foreign countries, including but not limited to the UK, France, Germany, Italy, the Netherlands, China (including Hong Kong), Canada, and Australia.

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Disclosure: No positions at time of writing.