Global X, the New York-based ETF issuer best known for its international and high yield products, appears to be back in the product lab again with a brand new SEC filing. However, unlike many of its other ETFs currently on the market, this proposed product will focus in on American securities instead.
This marks a shift for Global X, as the company has a lineup of Chinese and Brazilian funds, various commodity ETFs that have international exposure, and a number of other specialized products as well. Still, the company has been trending somewhat back to the American market with a few of its recent launches such as GURU or MLPA, so the latest American-centric filing shouldn’t be much of a surprise.
This is especially true given the focus of the product on yield, an area that is continuing to attract investors in droves. For this reason, Global X’s filing for the U.S. SuperDividend ETF (:DIV) seems like a logical step for the quickly growing issuer (See Inside The SuperDividend ETF).
This proposed fund, if ever approved, would mark the third ‘Super’ ETF in the company’s lineup, further rounding out the firm’s list of income-focused products. Unfortunately, many details were not yet available so little is known about the product at this time besides the proposed ticker symbol of DIV (read 11 Great Dividend ETFs).
However, we do know that the ETF looks to track the INDXX SuperDividend U.S. Low Volatility Index, equally weighting a group of common stocks, MLPs, and REITs that rank among the highest dividend yielding securities in the American market. Components are also required to have paid dividends consistently over the past two years while the index provider also looks to focus in on lower volatility securities in order to given the fund a beta of less than 1.0.
Undoubtedly Global X is hoping that this proposed product, if ever approved, will mirror in success its original SuperDividend ETF (SDIV). This product currently has a yield of over 7.7% in 30-Day SEC terms and over $160 million in total AUM (read Can You Beat These High Dividend ETFs?).
This is a pretty solid level of interest for this ETF, especially considering the global focus, expense ratio above 0.5%, and how fresh the ETF is to the market having made its debut in June of 2011. It should also be noted that the product also takes an equal weighted approach and focuses in on the highest yielders form around the world—including the U.S.—so there will definitely be some similarities between SDIV and a future DIV product.
However, the global dividend ETF market is by no means as competitive as the domestic one, with the main foes to Global X coming in the form of LVL and DWX. The American market, on the other hand, has a host of competitors not just in the broad dividend space, but in high yield segments as well such as mREITs, MLPs, and preferred stock.
Among these funds, the biggest competition will likely be the $10+ billion dollar dividend giants of VIG, DVY, and SDY (ok SDY has a little less than ten billion in AUM). Beyond that, there are plenty of other products that also promise high yields either by weighting based on payments, yield levels, or a combination of the two (see Invest Like the One Percent with These Three ETFs).
Clearly, DIV, if ever approved, will face a much more difficult road than what SDIV saw for its quest to build up a big following. However, if DIV can pass the regulatory hurdles and provide 7%+ yields like its international-focused cousin, it could manage to carve out a decent niche among the more diversified U.S. income products out there.
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