RevenueShares Launches Ultra Dividend Fund (RDIV)

by on October 3, 2013 | ETFs Mentioned:

Though lingering concerns over Fed tapering have weighed heavily on the markets in recent months, this week investors shifted their focus to Congress as they continue to struggle to come to a bipartisan budget agreement. Since Tuesday, the U.S. federal government officially shut down, closing its doors to all “non-essential” operations.  Though equity markets initially rallied following the shutdown, they fell into red territory on Wednesday after disappointing labor-market data provided little comfort during the continued stalemate in Congress [see The Biggest Technical Glitches On Wall Street].

While Wall Street turned its attention to Washington this week, ETF investors welcomed a slew of new exchange traded products, including a first-to-market “revenue-weighted” dividend ETF from RevenueShares:

Under the Hood: RDIVDividend ETFs

The Ultra Dividend Fund (RDIV) is linked to the RevenueShares Ultra Dividend Index, which is designed to select 60 securities from the S&P 900 index that have the highest average quarterly dividend yields over the past 12 months. Unlike most dividend ETFs–which are typically weighted by yield or consistency of payments–RDIV’s underlying index is weighted by top-line company revenue, which allows the fund to target stocks with high current yields that can be expected to drive price appreciation and dividend growth. As a result of RDIV’s methodology, the underlying index currently yields 4.92%, as of September 30, 2013 [see our Monthly Dividend ETFdb Portfolio].

In terms of sector allocations, RDIV provides meaningful exposure to a wide array of industries including utilities, telecommunication services, consumer goods, industrials, financials, and energy. Utilities equities, however, make up nearly 40% of the fund’s total assets. Top holdings currently include Lockheed Martin (LMT), AT&T (T), Duke Energy (DUK), and ConocoPhillips (COP), each of which are given a 5% allocation.

Meet the Dividend ETF Competition

RDIV joins the Large Cap Value Equities ETFdb Category, which is made up of more than 45 offerings with an average expense ratio of 0.36%; the new RevenueShares ETF falls in the middle of the cost spectrum as it charges 0.49% in annual fees. This ETF will face some stiff competition from more established players in the space, including:

  • Dividend Appreciation ETF (VIG, A) with over $17 billion in AUM.
  • Dow Jones Select Dividend Index Fund (DVY, A-) with nearly $13 billion in AUM.
  • SPDR S&P Dividend ETF (SDY, A-) with over $12 billion in AUM.
  • High Dividend Yield Index Fund (VYM, A+) with over $6 billion in AUM.
  • High Dividend Equity Fund (HDV, A+) with nearly $3 billion in AUM.

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Disclosure: No positions at time of writing.