The mutual fund’s strategy uses WEDCO’s Power Dividend Index to seek to generate income. The fund also deploys a tactical overlay in an effort to preserve capital in all market cycles.
“For long term, risk-averse investors who share our conviction that traditional benchmarking is antiquated, this product may offer a more effective way to increase total return,” says Jeffrey R. Thompson, senior vice president and portfolio manager of WEDCO, which is based in Norwood, Massachusetts.
The Power Dividend Index isolates the top five dividend-yielding stocks in each of the 10 Global Industry Classification Standard (GICS) sectors—consumer discretionary, consumer staples, energy, financial services, health care, industrials, materials, utilities, telecommunication services and information technology—that comprise the S&P 500 Index.
These 50 stocks make up the S-Network Sector Dividend Dogs Index and are equally weighted in the fund’s portfolio. The fund will sell positions in stocks that are removed from the S&P 500.
WEDCO uses an intermediate term tactical overlay to position the fund bearishly or bullishly depending on market developments and outlooks. This enables the fund’s portfolio to be invested in money market funds and other cash equivalents to protect investors during equity market downturns. Under normal market conditions, the portfolio’s stock holdings are automatically rebalanced on a quarterly basis.
Thompson adds, “The Power Dividend Index Fund combines a variety of elements in an effort to mitigate risk and maximize returns. Our rules-based approach to dividend investing can provide investors with a core high-yield strategy unaffected by the volatility in the fixed-income universe.”
W.E. Donoghue & Co., Inc. is a registered investment adviser offering tactical asset allocation solutions. The firm manages more than $600 million for individual and institutional separate account and mutual fund clients.