The worlds of dividend ETFs and actively-managed ETFs collidedhit the launching of the AdvisorShares Athena High Dividend ETF (DIVI).
AdvisorShares was an early pioneer in actively-managed ETFs, and their stable of ETFs consists of some of the marketplace’s most ingenious, such as the Ranger Equity Bear ETF– co-managed by short seller extraordinaire and fellow Dallas local John DelVecchio– and the TrimTabs Float Shrink ETF– an ETF that specializes in business that are strongly buying back their own shares.
With the Athena High Dividend ETF, AdvisorShares is bringing on board Dr. Thomas Howard, a previous academic turned money manager super star.
I reviewed Howard’s book, Behavioral Portfolio Management, in Could, and I consider him something of an eccentric genius. Howard runs a concentrated, high-conviction portfolio in which he intentionally forgets the names of holdings and the rates paid as a way of remaining emotionally detached. Though his method is uncommon, it’s difficult to say with results: Howard reports producing annualized returns of 29.2 % in the 5 years to April 30 in his aggressive growth portfolio.
So, what makes DIVI various from the existing dividend ETFs on the market, such as the Lead Dividend Gratitude ETF (VIG)or the iShares Select Dividend ETF (DVY)? [Disclosure: Sizemore Capital is long VIG and DVY]
To start DIVI is a worldwide ETF, spanning American, developed international and emerging market equities. Its second-largest portfolio holding is Telefonica Brasil, and it likewise holds Australian Macquarie Facilities, Chilean Banco de Chile Banco de Chile, and British Tesco Tesco, among numerous other non-US holdings. DIVI particularly notes “international diversification” as part of its investment mandate.
Secondly– and virtually distinctively amongst dividend ETFs– DIVI includes equity REITs, mortgage REITs, master restricted partnerships (“MLPs”), closed-end funds and business development business (“BDCs”) in its investment universe.
And lastly, unlike other dividend ETF I have actually seen, DIVI utilizes a guru-following approach that makes it similar in concept to Global X Top Expert Holdings Index ETFand theAlphaClone Alternative Alpha ETFthough with a far more active strategy. DIVI uses Howard’s behavioral research to recognize the “high conviction” picks of active mutual fund managers and then chooses high-dividend payers from the screen. DIVI then branches out across sector, method and country to decrease risk.
I am a huge fan of Howard’s research study, and I consider DIVI an intriguing spin on the dividend ETF. With 40 holdings, it is branched out without being overdiversified, and its broad variety of asset classes from which to choose its financial investments makes it very various from other dividend ETFs. With a net expenditure ratio of 0.99 %, DIVI is a little on the pricey side for an ETF, though certainly not excessive for an actively-managed fund.
Prior to suggesting it outright, I would such aswish to see how it carries out for a couple of quarters and to obtain a feel for the level and consistency of its dividend. But total, I like how I see from DIVI and suggest that readers a minimum of provide it an appearance.
One final tip: This is the unclean little key of ETFs. Managers are required to divulge their holdings daily. So, if you like the research study that goes into an ETF however don’t seem like paying the managements cost– or if you merely wantwish to cherry choice the really bestbest individual holdings– you can utilize its holdings list as a high-quality stock screener. DIVI has a great deal of fascinating holdings you may not have actually seen prior to in your research study.
Charles Lewis Sizemore, CFA, is the editor ofMacro Trend Investorand chief investment officer of the investment firm Sizemore Capital Management. Click hereto receive his FREE regular e-letter covering leading market understandings, trends, and the best stocks and ETFs to profitmake money from today’s finest international value plays.