BetaShares launches global ‘Income Leaders’ ETF on ASX

Oct 24th, 2018 | By | Category: Equities

BetaShares has launched the BetaShares Global Income Leaders ETF (INCM AU) on Australian Securities Exchange.

BetaShares launches global ‘Income Leaders’ ETF on ASX

The fund provides exposure to dividend-paying stocks from around the world.

The fund provides access to a globally diversified portfolio of stocks (excluding Australia) which are selected for their attractive and sustainable dividend yields.

BetaShares Chief Executive Officer Alex Vynokur, commented, “Most Australian investors understand that investing in global markets is a great way to diversify portfolios, particularly with the high levels of exposure that most Australian share portfolios have to local companies like the Big 4 banks and big miners.

“However, investors who desire such international diversification typically find that they generally have to accept a lower level of income when investing in global shares. INCM has been built to meet that challenge. [The fund] provides Australian investors exposure to a carefully screened portfolio of global companies with attractive income potential.”

The fund is linked to the Nasdaq Global Income Leaders Index which consists of 100 non-Australian dividend-paying stocks from the parent Nasdaq Developed Markets Large Mid Cap Index universe. To be eligible for inclusion, stocks must have a market capitalization greater than $500 million (or $1 billion for US equities).

Stocks must also have paid a regular dividend for the past three years, have positive total earnings over the past twelve months, and maintain a dividend payout ratio less than 80% (to avoid potential dividend traps). Additionally, the index methodology eliminates stocks that breach volatility thresholds set relative to the stock’s broader equity universe.

The methodology then selects the top 50 US stocks as well as the top 50 non-US stocks ranked by dividend yield. It further employs a dividend yield-weighting methodology, assigning a larger weight to companies with a higher dividend yield, while utilizing constraints such that the cumulative weight of US stocks is equivalent to the cumulative weight of all US stocks in the parent index, and similarly for European stocks. The remaining stocks have their weight adjusted so that the sum of all weights adds up to 100%.

Reconstitution and rebalancing occur on a quarterly basis.

As at 30 September 2018, the index had a 12-month trailing dividend yield of approximately 4.5% which compares favourably with that of the S&P/ASX 200 Index whose dividend yield at the same date was 4.2%.

It has also shown favourable long-term performance compared to traditional global benchmarks. Over the 10-year period to 30 September 2018, the income leaders index has delivered an annualized return of 10.8% per annum compared to 9.7% for the MSCI World Index.

INCM is offered with an expense ratio of 0.45%.

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