UBS Rolls Out Multi-Asset Income ETN (DVHI)

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Stocks have been on an absolute tear this week with major U.S. equity benchmarks soaring to all-time highs amid renewed stimulus hopes. Bullish momentum permeated the marketplace on Wednesday after the Federal Reserve surprised many with its decision to hold off from scaling back on bond-repurchases this time around; as a result, cyclical securities have been rallying because of the continuation of the Fed’s “accommodative” monetary policy [see also 101 High Yielding ETFs For Every Dividend Investor].

Amid the rally, UBS expanded its ETN suite with a dividend-focused offering; the ETRACS Diversified High Income ETN (DVHI) began trading on September 19th, 2013.

Diversified High Income ETN Hits The Street

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The new ETN is linked to the NYSE Diversified High Income Index, which looks to track the performance of a diversified basket of 138 publicly-traded securities that historically pay significant dividends or distributions. The underlying benchmark is split roughly 60/40 between stocks and bonds, while a number of the components are actually ETFs – including the PowerShares Emerging Markets Sovereign Debt Portfolio (PCY, B+) and the iShares iBoxx High Yield Corporate Bond ETF (HYG, A) [see our Monthly Dividend ETFdb Portfolio].

DVHI’s equity component focuses on:

Digging deeper, the ETN’s fixed-income component is made up of:

Meet the Competition

DVHI joins the Diversified Portfolio ETFdb Category, which is made up of over 20 ETPs with an average expense ratio of 0.85%; this places DVHI in the middle of the group’s cost-spectrum, seeing as how the new offering charges 0.84% in annual fees. This ETN will face some stiff competition from more established players in the space, including:

  • First Trust Multi-Asset Diversified Income Index Fund (MDIV, A+)  with over $480 million in assets under management
  • iShares S&P Growth Allocation Fund  (AOR, A)  with over $200 million in AUM
  • iShares S&P Moderate Allocation Fund  (AOM, A)  with over $185 million in AUM
  • iShares S&P Aggressive Allocation Fund  (AOA, A-)  with over $180 million in AUM
  • iShares S&P Conservative Allocation Fund  (AOK, A)  with nearly $135 million in AUM
  • State Street SPDR Income Allocation ETF  (INKM, A-)  with over $105 million in AUM
  • iShares Multi-Asset Income ETF  (IYLD, A)  with over $105 million in AUM

DVHI warrants a closer look under the hood from anyone looking to beef up their portfolio’s current-income stream while at the same time diversifying across multiple asset classes. 

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Disclosure: No positions at time of writing.

Click here to read the original article on ETFdb.com.

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