The new exchange-traded fund (ETF), based upon the S&P Low Volatility High Dividend index, is expected to trade under the ticker SPHD and will provide access to the 50 securities in the S&P 500 Index that historically have provided high dividend yields with lower volatility.
“The PowerShares S&P 500 High Dividend Portfolio (SPHD) combines two key objectives that are important to many investors today: an emphasis on high dividend equities with the well-documented benefits of low-volatility securities,” said Ben Fulton, Invesco PowerShares managing director of global ETFs. “The fund’s underlying index is designed to perform well in absolute terms and on a risk-adjusted basis compared to the S&P 500 Index, and had an average dividend yield of 4.51% as of September 30, 2012.”
The fund will generally invest at least 90% of its total assets in securities that comprise the underlying index. The index is compiled, maintained and calculated by S&P Dow Jones Indices and is designed to track the performance of 50 securities selected from the S&P 500 Index that have historically provided high dividend yields with lower volatility. The index provider screens the S&P 500 Index for the 75 securities with the highest dividend yields over the past 12 months and, from those securities, selects the 50 securities with the lowest realized volatility for inclusion in the underlying index. The index provider weights each of the securities in the index by its dividend yield, with the highest dividend-yielding stocks receiving the highest weights. The index is rebalanced semi-annually.
The PowerShares S&P 500 High Dividend Portfolio (SPHD) listing will expand the available range of PowerShares Factor-Driven ETFs to 13. With more than $3.7 billion in AUM, the PowerShares suite of Factor-Driven ETFs provide advisers and investors with an approach for optimizing portfolios to changing market conditions using factor tilts to low volatility, high beta, high quality, relative strength and soon high dividend strategies. For more information, visit http://invescopowershares.com.