More Low Vol, High Dividend ETFs Come To Town

An increasingly popular niche within the expansive universe of smart beta exchange-traded funds is the low volatility/high dividend concept.

SPHD And 2 New ETFs

The PowerShares S&P 500 High Dividend Low Volatility Portfolio (PowerShares Exchange-Traded Fund Trust II SPHD) pioneered the low volatility/high dividend concept just over four years ago. In the nearly 50 months that SPHD has been on the market, the ETF has accumulated $2.63 billion in assets under management. Of that total, $1.9 billion has flowed into the fund over the past year, a total exceeded by just one other PowerShares ETF over that period.

On the back of SPHD's success, PowerShares, the fourth-largest U.S. ETF issuer, added international and small-cap counterparts to the popular low volatility/high dividend fund. The PowerShares S&P SmallCap High Dividend Low Volatility Portfolio XSHD and the PowerShares S&P International Developed High Dividend Low Volatility Portfolio IDHD debuted earlier this week.

Introducing XSHD

The PowerShares S&P SmallCap High Dividend Low Volatility Portfolio follows the S&P SmallCap 600 Low Volatility High Dividend Index, an index comprised of the 60 members of the S&P SmallCap 600 Index “that have historically provided high dividend yields with lower volatility over the past 12 months,” according to PowerShares.

XSHD actually holds 57 stocks. The new ETF's largest sector allocation is 15.6 percent to real estate. The consumer staples, financial services, industrial, utilities and materials sectors also have double-digit representation in the new ETF.

XSHD charges 0.3 percent per year, or $30 on a $10,000 investment.

A Little About IDHD

The PowerShares S&P International Developed High Dividend Low Volatility Portfolio follows the S&P EPAC Ex-Korea Low Volatility High Dividend Index. That benchmark “is composed of 100 securities in the S&P EPAC Ex-Korea LargeMidCap Index that have historically provided high dividend yields with lower volatility over the past 12 months,” according to PowerShares.

IDHD has a diversified country lineup and one that differs significantly from traditional EAFE exposure. For example, the new ETF allocates over 16 percent of its weight to Singapore while Australia and New Zealand combine for over a quarter of the geographic lineup.

Utilities are the new ETF's largest sector exposure at 19.1 percent while industrials, real estate and telecom all command allocations over 14 percent.

IDHD also charges 0.3 percent per year.

Disclosure: Todd Shriber owns shares of SPHD.