Yes, you read that right – the Franklin International Core Dividend Tilt Index ETF (DIVI ) has seen a massive uptick in engagement from advisors, according to VettaFi’s data, at 9,900% year-over-year. The core dividend ETF launched back in 2016 and currently holds $214 million in AUM, which suggests that this jump in engagement may not be noise from a recent launch.
DIVI has, however, seen its net inflows spike amid the last half year’s spike for dividend strategies. The strategy has seen $185 million in net inflows coming over the last six months, with a large majority of that ($142 million) coming in over the last three months, particularly.
Dividend interest has certainly grown due to volatility going back to the end of last year, as issuers have looked to offer advisors and investors current income amid the dual challenge of persistent, sticky inflation and rising rates at the Federal Reserve.
Check out an interview with an ETF leader at Franklin Templeton here: Franklin Templeton’s Mann on 2023, Smart Beta, Income
DIVI is an active strategy, which may be picking up on a strong start to the year for active ETFs, too. Charging nine basis points, DIVI applies a dividend yield to its parent index, the Morningstar Developed Markets ex-North America Target Market Exposure Index. DIVI applies a screen to the trailing 12-month dividend yields, which can include applying sector, country, and turnover constraints. Overall, it’s designed to achieve higher dividend yields than its parent index.
DIVI has turned in solid performance to start the year, too, outperforming its ETF Database category average and its FactSet segment average on a YTD basis by 136 and 137 basis points, respectively. It also adds a 5.7% annual dividend yield on top of that.
Its foreign equities focus could also be a contributor as markets have taken a liking to foreign equities of late, which could be benefitting from an expensive and volatile U.S. equities market being less appealing than more affordable, dividend-offering foreign firms.
For more on an emerging markets-flavored dividend ETF, read more here.
Moving forward, with bank issues the latest source of uncertainty for U.S. advisors and investors, current income with limited exposure to a volatile U.S. market in a core dividend ETF like DIVI could be worth watching. With more income-focused strategies coming online from Franklin Templeton, income looks to remain a key theme in the months ahead, with DIVI riding a wave of advisor engagement momentum.
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