This Dividend ETF Quietly Grew In A Big Way In 2018

Some high dividend exchange traded funds were punished by the Federal Reserve's four interest rate hikes in 2018. Others posted impressive growth despite a challenging operating environment.

That group includes the WBI Power Factor High Dividend ETF WBIY.

What Happened

The WBI Power Factor High Dividend ETF has nearly $89 million in assets under management. As Paul Weisbruch, head of ETF sales and trading at Dallas-based Esposito Securities points out, WBIY added $66 million in assets last year, an impressive haul considering many investors shied away from high dividend strategies as interest rates climbed.

WBIY targets the Solactive Power Factor High Dividend Index and is just over two years old. The fund is a high dividend play with value characteristics.

Why It's Important

Data suggest investors are getting interested in WBIY.

“The fund raised more than $66 million in 2018 and trading volume in the product picked up considerably in late December, topping 1 million shares in one session in particular versus three-month trailing average volume of about 51,000 shares,” said Weisbruch. “Thanks to the uptick in volume in December, the one-month trailing average volume in WBIY has increased to more than 90,000 shares and the fund itself is now the third largest in the WBI Shares fund family in terms of asset size.”

Over 89 percent of WBIY's holdings are classified as mega-, large- and mid-cap stocks. At the end of 2018, consumer cyclical names accounted for 28.4 percent of WBIY's weight, according to issuer data. The financial services and consumer staples sectors combined for 31.1 percent.

Advisors' appetite for alternatively-weighted ETFs could bolster demand for WBIY.

“The appetite among investment advisors for 'Smart Beta' has clearly been growing in the ETF marketplace in recent quarters and recent years and WBIY certainly was a beneficiary of this last year,” said Weisbruch.

What's Next

WBIY is positioned to benefit from a rebound in value stocks or the Fed slowing its pace of rate hikes. Underscoring its value tilt, WBIY had a price-to-earnings ratio of 9.78 times at the end of last year, according to issuer data. At that time, the fund's 30-day SEC yield was 5.35 percent. WBIY is up nearly 7 percent to start 2019.

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