Advisors Asset Management (AAM), begun trading two new High Dividend ETFs, the AAM S&P Emerging Markets High Dividend Value ETF (NyseArca:EEMD) and the the AAM S&P 500 High Dividend Value ETF (NyseArca: SPDV), on Wednesday, November 29, 2017. Here is a synopsis of the new ETFs:
1.
FUND INFORMATION:
| Symbol: EEMD | Exchange: NYSE ARCA |
| Name: AAM S&P Emerging Markets High Dividend Value ETF | Net Expense Ratio: 0.49% |
FUND OBJECTIVE:
The AAM S&P Emerging Markets High Dividend Value ETF seeks to track the total return performance, before fees and expenses, of the S&P Emerging Markets Dividend and Free Cash Flow Yield Index.
REFERENCE INDEX:
The S&P Emerging Markets Dividend and Free Cash Flow Yield Index is a rules-based, equal-weighted index that is designed to provide exposure to the constituents of the S&P Emerging Plus LargeMidCap Index that exhibit both high dividend yield and sustainable dividend distribution characteristics, while maintaining diversified sector exposure. The Index was developed in 2017 by S&P Dow Jones Indices, a division of S&P Global. The S&P Emerging Plus LargeMidCap Index is designed to measure the performance of large- and mid-capitalization securities in emerging markets. The S&P Emerging Plus LargeMidCap Index includes equity securities that are listed in Brazil, Chile, China, Colombia, the Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Peru, the Philippines, Poland, Qatar, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey, and the United Arab Emirates.
Construction of the Index begins with the universe of equity securities that are included in the S&P Emerging Plus LargeMidCap Index, have a minimum float-adjusted market capitalization of US$300 million, and have a median daily traded value of at least US$1 million. For each equity security in the S&P Emerging Plus LargeMidCap Index, the security’s dividend yield and free-cash-flow yield (i.e., a company’s cash flow from operations less capital expenditures divided by its market capitalization) are then adjusted to account for outliers. If a security’s dividend yield or free-cash-flow yield is in the top or bottom 2.5% of the S&P Emerging Plus LargeMidCap Index, the dividend yield or free-cash-flow yield, as applicable, for such security is replaced with the dividend yield or free-cash-flow
yield of the security nearest to such top or bottom 2.5% threshold. The universe is then screened to keep only equity securities with a positive realized dividend yield (i.e., yield based on the total dividends paid for the most recent 12-month period) and free-cash-flow yield. The remaining securities are referred to as the “Selection Pool”.
For each security in the Selection Pool, the security’s dividend yield or free-cash-flow yield are then scored using a statistical normalization model (i.e., a tool to compare how close each yield is to the average yield for the Selection Pool) to assign a dividend yield score and free-cash-flow yield score from zero to one for each company. The equity securities in the Selection Pool are then ranked by the product of their dividend yield score and free-cash-flow yield score, and the top five scoring securities are selected from each sector. The Index uses Standard & Poor’s Global Industry Classification Standards to define companies within one of the following sectors: consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, telecommunication services, and utilities. Fewer than five securities may be selected if there are fewer than five securities in the Selection Pool for a given sector.
The Index is reconstituted (i.e., Index Constituents are added or deleted and weights are reset to equal-weight) semi-annually after the close of the third business day in January and July. At the time of each reconstitution of the Index, Index Constituents are added or deleted based on company data as of the last business day of December and June, respectively, and the Index Constituents are equally weighted based on closing prices as of 5 business days prior to the last business day of the reconstitution month. If an Index Constituent is removed from the S&P Emerging Plus LargeMidCap Index, such security will simultaneously be removed from the Index. Additions to the Index Constituents only take place during the semi-annual reconstitutions. If multiple share classes of a single company qualify for inclusion in the Index, only the share class with the highest liquidity, measured by median daily value traded, is selected. As of
September 30, 2017, the Index included significant exposure to companies in China and Taiwan.
FUND TOP 10 HOLDINGS (12/04/17):
| ST SHINE OPTICAL | 2.46% |
| BAIC MOTOR CORP LT | 2.46% |
| CHINA VANKE CO | 2.36% |
| CHENG UEI PRECISIO | 2.27% |
| WALSIN LIHWA CORP | 2.25% |
| SK INNOVATION CO | 2.20% |
| MOBILE TELESYSTEMS PJSC | 2.16% |
| SPAR GROUP LIMITED | 2.15% |
| SINO-OCEAN GROUP HOLDING LTD | 2.15% |
| HYPERMARCAS SA | 2.12% |
Holdings By Country (12/04/17):
| China | 24.43% |
| Taiwan | 22.18% |
| Russia | 9.67% |
| South Africa | 9.36% |
| South Korea | 8.08% |
| Thailand | 5.67% |
| Brazil | 5.38% |
| Malaysia | 3.36% |
| Mexico | 2.96% |
| Czech Republic | 1.81% |
Useful Links:
EEMD Home Page
Category:
2.
FUND INFORMATION:
| Symbol: SPDV | Exchange: NYSE ARCA |
| Name: AAM S&P 500 High Dividend Value ETF | Net Expense Ratio: 0.29% |
FUND OBJECTIVE:
The AAM S&P 500 High Dividend Value ETF seeks to track the total return performance, before fees and expenses, of the S&P 500 Dividend and Free Cash Flow Yield Index.
REFERENCE INDEX:
The S&P 500 Dividend and Free Cash Flow Yield Index is a rules-based, equal-weighted index that is designed to provide exposure to the constituents of the S&P 500 Index that exhibit both high dividend yield and sustainable dividend distribution characteristics, while maintaining diversified sector exposure. The Index was developed in 2017 by S&P Dow Jones Indices, a division of S&P Global. The S&P 500 Index consists of approximately 500 leading U.S.-listed companies representing approximately 80% of the U.S. equity market capitalization.
Construction of the Index begins with the universe of equity securities that are included in the S&P 500 Index. For each equity security in the S&P 500 Index, the security’s dividend yield and free-cash-flow yield (i.e., a company’s cash flow from operations less capital expenditures divided by its market capitalization) are adjusted to account for outliers. If a security’s dividend yield or free-cash-flow yield is in the top or bottom 2.5% of the S&P 500 Index, the dividend yield or free-cash-flow yield, as applicable, for such security is replaced with the dividend yield or free-cash-flow yield of the security nearest to such top or bottom 2.5% threshold. The universe is then screened to keep only equity securities with a positive indicated annual dividend yield (i.e., yield based on a company’s most recent dividend amount) and free-cash-flow yield. The remaining securities are referred to as the “Selection Pool”.
For each security in the Selection Pool, the security’s dividend yield and free-cash-flow yield are then scored using a statistical normalization model (i.e., a tool to compare how close each yield is to the average yield for the Selection Pool) to assign a dividend yield score and free-cash-flow yield score from zero to one for each company. The equity securities in the Selection Pool are then ranked by the product of their dividend yield score and free-cash-flow yield score, and the top five scoring securities are selected from each sector. The Index uses Standard & Poor’s Global Industry Classification Standards to define companies within one of the following sectors: consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, telecommunication services, and utilities. Fewer than five securities may be selected if there are fewer than five securities in the Selection Pool for a given sector.
The Index is reconstituted (i.e., Index Constituents are added or deleted and weights are reset to equal-weight) semi-annually after the close of the third business day in January and July. At the time of each reconstitution of the Index, Index Constituents are added or deleted based on company data as of the last business day of December and June, respectively, and the Index Constituents are equally weighted based on closing prices as of 5 business days prior to the last business day of the reconstitution month. If an Index Constituent is removed from the S&P 500 Index, such security will simultaneously be removed from the Index. Additions to the Index Constituents only take place during the semi-annual reconstitutions.
FUND TOP 10 HOLDINGS (12/04/17):
| ABBVIE INC | 2.53% |
| GRAINGER W W INC | 2.41% |
| CF INDS HLDGS INC | 2.35% |
| CATERPILLAR INC DEL | 2.31% |
| VALERO ENERGY CORP NEW | 2.27% |
| WAL-MART STORES INC | 2.27% |
| CISCO SYS INC | 2.20% |
| SEAGATE TECHNOLOGY PLC | 2.15% |
| LYONDELLBASELL INDUSTRIES N V SHS – A – | 2.14% |
| KOHLS CORP | 2.13% |
Useful Links:
SPDV Home Page
Category:
ETFtrack comment:
Here is a comment from Lance McGray, Managing Director, Head of ETF Product at AAM:
“Reaching for the highest yielding stocks is not always the best course of action. Just as important as the actual dividend yield is the sustainability of that dividend. In our opinion, Free Cash Flow yield is an ideal indicator of dividend sustainability, and when coupled with Dividend yield in the selection process, the result can be powerful. This may help investors not only meet their current cash flow needs, but also potentially provide future capital growth.”
About Advisors Asset Management
For more than 35 years, AAM has been a trusted resource for financial advisors and broker/dealers. It offers access to UITs (unit investment trusts), open- and closed-end mutual funds, separately managed accounts (SMAs), structured products and the fixed income markets, portfolio analytics and now exchange-traded funds (ETFs).