Global X launches international ‘SuperDividend’ ETF

Nov 16th, 2016 | By | Category: Equities

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Global X Funds has launched a new exchange-traded fund offering exposure to international income-producing equities. The Global X MSCI SuperDividend EAFE ETF (Nasdaq: EFAS) tracks the performance of 50 firms listed in either Europe, Australia or the Far East with the highest dividend yields. It is the seventh ETF in Global X’s ‘SuperDividend’ suite.

Global X launches international ‘SuperDividend’ ETF

Jay Jacobs, Director of Research at Global X.

Low interest rates and increasing longevity have created a growing need for investments that can potentially deliver both income and growth. According to Fama and French’s research on US equities performance, the highest decile of dividend paying stocks have historically delivered yields averaging 6.4%, while simultaneously exceeding the total returns of the S&P 500 on an annual basis.

Jay Jacobs, Director of Research at Global X, commented: “Amidst a persistently low interest rate environment, investors are continually searching for sources of income. We see tremendous value in the high dividend segment of developed international markets and we’re proud to offer investors EFAS, which provides efficient exposure to these equities. We see additional value in investors utilizing the fund to help diversify their geographic, currency and interest rate exposures.”

Global X notes that, by allocating across Europe, Australasia, and the Far East, investors can potentially diversify their geographic, interest rate, and currency risks.

The index underlying the ETF is the MSCI EAFE Top 50 Dividend Index. The index’s methodology ranks the securities within the MSCI EAFE Index by dividend yield, selecting the top 50 constituents and equal-weighting them to prevent over-concentration in any single stock. Companies within the index are screened quarterly for dividend cuts with those who have reduced their dividend pay-outs being replaced with the next highest yielding stock not currently in the index. Sector and country weights are capped at 35% at each review and components are rebalanced annually.

The fund’s index has returned 8.8% year-to-date (as of 31 October 2016) compared to -0.35% for the MSCI EAFE Index. Using back-tested data from 30 November 1998, the index has also outperformed its broad market benchmark, returning 9.0% per annum compared to 3.7% per annum for the MSCI EAFE Index.

global-x-msci-eafe-top-50-dividend-chart

Source: MSCI

As of 31 October 2016, the largest country exposures are to the UK (24.7%), Australia (23.9%), France (11.7%), Sweden (9.2%) and Spain (6.4%) and the largest sector exposures are to financials (34.5%), materials (13.9%), utilities (12.1%), telecommunication services (11.4%) and consumer discretionary (10.9%).

EFAS has a total expense ratio (TER) of 0.55%.

As with other funds in the SuperDividend suite, the ETF makes monthly distributions.

Global X’s suite of SuperDividend ETFs also includes funds with exposure to stocks globally, in the US, and in emerging markets, as well as the highest yielding REITs, preferred stocks, and alternatives globally. The full suite is listed below:
Global X SuperDividend ETF (NYSE: SDIV)
Global X SuperDividend US ETF (NYSE: DIV)
Global X MSCI SuperDividend EAFE ETF (Nasdaq: EFAS)
Global X SuperDividend Emerging Markets ETF (NYSE: SDEM)
Global X SuperDividend REIT ETF (Nasdaq: SRET)
Global X SuperDividend Alternatives ETF (Nasdaq: ALTY)
Global X SuperIncome Preferred ETF (NYSE: SPFF)

In Europe there are numerous  ETF providers offering equity income funds; however, investors seeking exposure to the very highest yielding segment of the market may wish to consider the three funds in iShares’ ‘Select Dividend’ range. The ETFs offer exposure to global, European or eurozone equities. The 30 stocks (100 stocks for the globally-focused ETF) with the highest dividend yields are chosen and weighted in such a way to amplify the exposure to those companies with the highest yields. The ETF’s TERs range from 0.31% to 0.46%.

Other ETFs with exposure to high yielding equities while using quality screens to boost the sustainability of dividend payments include funds from SPDR ETFs, BMO Asset Management, Lyxor, Source and WisdomTree.

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