WBI Investments, begun trading a new US High Dividend Smart Beta ETF, the WBI Power Factor High Dividend ETF (Nyse Arca: WBIY), on Wednesday, December 21, 2016. Here is a synopsis of the new ETF:
|Exchange: NYSE ARCA
|Name: WBI Power Factor High Dividend ETF
|Net Expense Ratio: 0.67%
The WBI Power Factor High Dividend ETF seeks to provide investment results that correspond to the price and yield – before fees and expenses – of the Solactive Power Factor High Dividend Index.
The Solactive Power Factor High Dividend Index is designed to select securities from the Solactive US Broad Market Index (Parent Index) that exhibit certain yield and fundamental value characteristics. The Parent Index includes large, mid- and small-cap securities listed in the U.S., including approximately the 3,000 largest U.S. companies that are selected and weighted according to free float market capitalization. The Parent Index is adjusted semi-annually in May and November. Issuers undergoing initial public offerings may be added to the Parent Index on a quarterly basis, consistent with the Parent Index’s selection methodology.
In particular, the Underlying Index is designed to select equity securities from the Parent Index with an above-average forecasted dividend yield, scored on the basis of 3 fundamental value characteristics (Power Factors):
Price to trailing 12-month diluted earnings from continuing operations ratio (P/E);
Price to trailing 12-month free cash flow (P/CF); and
Price to trailing 12-month sales ratio (P/S).
The Underlying Index is constructed by scoring each ordinary dividend paying, common stock constituent from the Parent Index both directly and relative to industry peers using the 3 Power Factors and ranking those securities in descending order according to their dividend indicated yield. The 50 companies with the largest dividend indicated yield, subject to certain asset diversification and liquidity requirements and a maximum 5% per-company weighting, are chosen as Underlying Index components. Dividend indicated yield is the total prior year dividend payments of a security expressed as a percentage of the current price adjusted for market expectations as to next year dividends indicated by related option premiums and excluding any off-cycle dividend payments.
Once a month (five business days before the last trading day of the month) the Underlying Index components are screened for dividend cuts or an overall negative outlook concerning the companies’ dividend policy. If any changes need to be implemented, the Underlying Index will be adjusted at the close of the last trading day of the respective month. The composition of the Underlying Index is adjusted quarterly. The Underlying Index is constructed to limit turnover and excessive exposure to particular sectors, component weights, or other investment style factors, such as recently announced or implemented dividend cuts. The Underlying Index limits component turnover by permitting the retention of securities that were previously among the top 50 highest scoring securities, until they are no longer among the 75 highest scoring securities. The Underlying Index restricts exposure to a particular sector to 20% of the Underlying Index. The Underlying Index only includes long positions (i.e., short positions are impermissible). All component securities of the Underlying Index are dividend-paying securities whose yields are above the median for dividend-paying securities in the Parent Index.
Index Top Holdings (12/31/16):
|VALERO ENERGY CORP NEW
|VERIZON COMMUNICATIONS INC
|GENERAL MTRS CO
|FORD MTR CO DEL
|SEAGATE TECHNOLOGY PLC
|LYONDELLBASELL INDUSTRIES N V
|INTL PAPER CO
WBIY Home Page
Category: Equities> Regions> USA> US Income > US Dividends
Here is a comment from Schreiber, WBIY’s portfolio manager and co-author of ‘All About Dividend Investing’ (McGraw Hill 2011):
“We’re introducing a smarter approach for yield starved investors at a time when the need for consistent capital growth and capital preservation is absolutely critical. As investors rush into the high-yield dividend space, we feel that WBIY will provide them with a smarter approach that pairs the search for high yielding stocks with a preference for only those companies with the strongest fundamentals.”