Global X Expands SuperDividend Theme in REIT and Emerging Markets - ETF News And Commentary
The year 2015 is shaping up as a great one for income strategies, especially on the global level, with low interest rate policies prevailing in most developed nations. The European Central Bank (ECB) has launched a QE program, Japan is continuing with the same and the U.S. still believes that it is not yet time for hiking key rates. All these are luring investors to the high dividend stocks and ETFs (read: 5 Dividend ETFs to Buy for Income in 2015).
In fact, many issuers actually put out new products in this space, beefing up the number of options at investors’ disposal in this key market segment. One such issuer is Global X, which has already made a killing in the high-yield dividend space thanks to its famous version Global X SuperDividend ETF (SDIV). The issuer has now launched two high dividend products in the global REIT and emerging markets ETFs space.
Global X SuperDividend REIT ETF (SRET)
This product tracks the Solactive Global SuperDividend REIT Index, focusing on 30 global REIT companies that are the highest yielding. Despite global exposure, the fund is heavy on the U.S. economy with more than 5% of assets invested in it. Australia follows the U.S. with about 10.8% focus.
It should also be noted that the fund is equally weighted. Novion Property Group (3.83%), Columbia Property Trust (3.74%) and Stockland (3.51%) are top the holdings of the fund. Mortgage REITs rule the portfolio with about 47% exposure while Diversified REITs take about 33% of the basket. The fund looks to charge investors 58 basis points a year in fees for this exposure.
The fund is an interesting choice for global exposure, to tap low volatility products and enjoy solid income, per the issuer. The issuer also noted that over the last five years, global REITs have exhibited ‘lower volatility than U.S. equities’.
Top Competition: There are other funds on the market which offer up exposure to the global REIT space and could be tough rivals of this new Global X product. In particular, iShares Global REIT ETF (REET) and SPDR Dow Jones Global Real Estate ETF (RWO) could be the roadblocks as far as international dividend investing is concerned. Like SRET, both these funds have sizable exposure in the U.S. stocks (see all Real Estate ETFs here).
RWO is a popular fund with about $2 billion in assets while REET is yet to attain popularity as evident from its paltry assets of about $21.4 million. Plus, both are cheaper than the new Global X product as RWO charges 50 bps in fees and REET charges only 14 bps.
Global X SuperDividend Emerging Markets ETF (SDEM)
This ETF looks to focus on high income stocks of emerging markets and charges investors 65 basis points a year in fees. The product will track the Indxx SuperDividend Emerging Markets Index. Companies paying dividends in each of last two years are included in the index (see all Broad Emerging Market ETFs here).
In total, the portfolio will hold 50 stocks in its basket. Sistema Jsfc-Reg GDR (3.03%), Vedanta Resources (2.79%) and Mobile Telesystems ADR (2.53%) are the top three holdings of the fund. It should also be noted that the portion of stocks per sector (and country) is limited to 25% of the index, so there looks to be a moderate level of diversification.
From a national perspective, Brazil (17.6%), China (16.2%), Russia (14.9%) and South Africa (14.4%) take the top four spots. Sectors like Financials and Utilities account for about 23% and 15% of the benchmark, respectively, followed closely by Energy (14.8%) and Materials (13.8%) (read: 3 Financial ETFs for Dividend and Growth).
Obviously, this ETF is designed to be an income solution for investors via the emerging market route. Further, the Fed looks to keep the rates low for as long as the economy requires support. Till then, investors can easily look for some other high-yielding avenues.
Top Competition: While the ETF certainly looks to have one of the highest yields in the emerging market space, it is certainly not the only dividend-focused emerging market ETF. There are a handful of other products already in the space, so it might be difficult for SDEM to build assets.
Products like iShares Emerging Markets Dividend ETF (DVYE), SPDR S&P Emerging Markets Dividend ETF (EDIV) and WisdomTree Emerging Markets Equity Income Fund (DEM) might pose threats to the newly launched ETF. DEM charges 63 bps in fees while EDIV and DVYE charge 49 bps each.
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GLBL-X SUPERDIV (SDIV): ETF Research Reports
GLBL-X SPRDV RE (SRET): ETF Research Reports
ISHARS-GLB REIT (REET): ETF Research Reports
SPDR-DJ W GL RE (RWO): ETF Research Reports
GLBL-X SPRDV EM (SDEM): ETF Research Reports
ISHARS-EM DIV (DVYE): ETF Research Reports
SPDR-SP EM DVD (EDIV): ETF Research Reports
WISDMTR-EM EQ I (DEM): ETF Research Reports
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