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New Equity Income ETF With A Twist

Matthew McCall

A Boston-based FFMC LLC, advisors to the QuantShares ETFs, have created a new ETF with two appealing characteristics: high dividend income and capital appreciation. The QuantShares Hedged Dividend Income ETF (NYSE: DIVA) began trading on January 15 and tracks the Indxx Hedged Income Index (Bloomberg: IDIVALS).

A Unique Approach

DIVA has been constructed to provide investors with high dividend income and secondarily provide capital appreciation. The two different investment strategies are something investors often look to achieve with a portfolio and the new ETF will look to provide both within a single vehicle.

The ETF achieves this by investing in about 100 U.S. securities that have historically had high dividend yields. At the same time, the ETF will short approximately 200 stocks that have little to no dividend yield. This strategy is aimed at reducing risk and volatility that is typical of many long-only equity strategies.

The maximum weight for any sector in the long portion of the portfolio is 25 percent and 15 percent for specific industries. The short portfolio will always remain 50 percent of the total long positions.

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DIVA's Stats

DIVA is made up of a total of 267 equity securities. The top holdings include:

  • Omega Healthcare Investors Inc (NYSE: OHI)
  • BioMed Realty Trust Inc (NYSE: BMR)
  • Realty Income Corp (NYSE: O)
  • National Retail Properties, Inc. (NYSE: NNN) all coming in with a weighting of 1.1 percent

Since opening at just above $25, DIVA has increased slightly to $25.37, where it recently traded. The ETF has an expense ratio of 0.99 percent.

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