Legg Mason, begun trading a new Emerging Markets Low Volatility High Dividend, the Legg Mason Emerging Markets Low Volatility High Dividend ETF (Bats: LVHE), on Friday, November 18, 2016. Here is a synopsis of the new ETF:
|Symbol: LVHE||Exchange: BATS|
|Name: Legg Mason Emerging Markets Low Volatility High Dividend ETF||Net Expense Ratio: 0.50%|
The Legg Mason Emerging Markets Low Volatility High Dividend ETF seeks to track the investment results of the QS Emerging Markets Low Volatility High Dividend Hedged Index.
The QS Emerging Markets Low Volatility High Dividend Hedged Index seeks to provide stable income through investments in stocks of profitable companies in emerging markets outside of the United States with relatively high dividend yields or anticipated dividend yields and lower price and earnings volatility, while mitigating exposure to exchange-rate fluctuations between the U.S. dollar and currencies in which the component securities are denominated.
The Underlying Index is composed of equity securities in emerging markets outside of the United States across a range of market capitalizations that are included in the MSCI Emerging Markets IMI Index. Stocks in the Underlying Index must have demonstrated profitability over the last 4 fiscal quarters as a whole. Only stocks that have paid or are anticipated to pay a dividend are included in the Underlying Index. The methodology calculates a composite “stable yield” score. The methodology adjusts the yield of stocks with relatively high price volatility (as measured over the past 12 months based on the standard deviation of daily returns) and earnings volatility (as measured by the variation of past earnings and projected earnings) and from countries with relatively high interest rates downward. The methodology adjusts the yield of stocks with relatively low price volatility and earnings volatility and from countries with relatively low interest rates upward. The Underlying Index will also take into account foreign withholding taxes on dividend payments to minimize their impact on distribution yield. Underlying Index weights are calculated to maximize its stable yield score subject to concentration limits, liquidity requirements and turnover restraints. QS Investors, LLC (QS), the fund’s subadviser anticipates that the number of component securities in the Underlying Index will range from 50 to 200 from approximately 23 countries, including Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey and United Arab Emirates, but this number may vary due to market conditions. As initially constituted and balanced, no individual component of the Underlying Index will exceed 2.5% of the Underlying Index, no individual sector will exceed 25% of the Underlying Index, no country will exceed 15% of the Underlying Index, no region will exceed 50% of the Underlying Index and real estate investment trust (REIT) components as a whole will not exceed 15% of the Underlying Index. The Underlying Index’s components are reconstituted annually and rebalanced quarterly. The Underlying Index is reconstituted on a different date from the MSCI Emerging Markets IMI Index. The fund’s securities portfolio is rebalanced when the Underlying Index is rebalanced or reconstituted. The composition of the Underlying Index and the fund after reconstitution and rebalancing may fluctuate and exceed the above Underlying Index limitations due to market movements. The components of the Underlying Index, and the degree to which these components represent certain sectors and industries, may change over time.
The fund may invest up to 20% of its net assets in foreign currency forward contracts and other currency hedging instruments, certain index futures, options, options on index futures, swap contracts or other derivatives (Financial Instruments) related to its Underlying Index and its component securities; cash and cash equivalents; other investment companies, including ETFs; exchange-traded notes; and in securities and other instruments not included in its Underlying Index, but which QS believes will help the fund track its Underlying Index. As noted below, the fund invests in currency hedging instruments to offset the fund’s exposure to currencies in which the fund’s holdings are denominated. The fund may also invest in equity index futures and currency derivatives to gain exposure to local markets or segments of local markets for cash flow management purposes and as a portfolio management technique.
Fund Top Hodlings (11/25/16):
|SSC GOVERNMENT MM GVMXX||4.30%|
|CHINA CONSTRUCTION BANK H||2.65%|
|BANK OF CHINA LTD H||2.64%|
|AGRICULTURAL BANK OF CHINA H||2.63%|
|HYUNDAI MOTOR CO||2.54%|
|CHINA MOBILE LTD||2.51%|
|TENAGA NASIONAL BHD||2.46%|
|PUBLIC BANK BERHAD||2.46%|
|EMIRATES TELECOM GROUP CO||2.40%|
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