Global Beta Advisors debuts with revenue-weighted US equity income ETF

Dec 27th, 2019 | By | Category: Equities

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Philadelphia-based Global Beta Advisors has become the latest firm to unveil an ETF with the launch of the Global Beta Smart Income ETF (GBDV US) on NYSE Arca.

Global Beta debuts with smart beta US equity income ETF

The fund provides exposure to high dividend-paying US equities, weighted by top-line revenue.

The fund provides exposure to US dividend-paying equities and is underpinned by a sales-driven investment philosophy.

The ETF tracks the proprietary Global Beta Smart Income Index which selects its constituents from the large and mid-cap S&P 900 Index.

To be eligible for selection, a stock must rank in the top 20% of the S&P 900 according to average 12-month trailing dividend yield over the past four quarters, as well as in the top half of its GICS-defined sector according to market cap.

Constituents are weighted by top-line revenue subject to a single security cap of 5% to limit concentration risk. Rebalancing occurs quarterly.

Constituents are monitored on a continuous basis to detect any expected dividend cuts. If a company announces a dividend cut, it is immediately removed from the index.

A revenue-weighted approach may offer benefits over alternative weighting schemes as revenue is less open to management manipulation compared to earnings.

The index currently consists of 83 securities. Relative to the S&P 900, it has significantly reduced exposure to the information technology sector (7.3% vs. 22.4%) and increased exposure to energy stocks (19.0% vs. 4.1%). The largest sector exposures are energy (19.0%), health care (13.8%), financials (13.4%), consumer discretionary (10.0%), and consumer services (9.9%).

Global Beta Advisors has waived the fund’s management fee for the first six months (through June 2020). After this period, investors will be required to pay the fund’s net expense ratio of 0.29%. The 0.29% also includes certain fee waivers – the fund’s gross expense ratio, which is expected to be enforced from 1 April 2021, is 0.49%. Dividends will be paid to investors on a quarterly basis.

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