Guggenheim launches smart beta yield-weighted Dow Jones ETF

Dec 17th, 2015 | By | Category: Equities

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Guggenheim Investments, a US-based provider of exchange-traded funds, has announced the launch of the Guggenheim Dow Jones Industrial Average Dividend ETF (DJD).

Guggenheim launches smart beta yield-weighted Dow Jones ETF

William Belden, Guggenheim Investments Managing Director and Head of ETF Business Development.

The fund has been listed on the NYSE Arca and is linked to the Dow Jones Industrial Average Yield Weighted Index, which weights DJIA constituents by their twelve-month dividend yield instead of price.

Guggenheim, which was among the early pioneers of smart beta ETFs with the introduction of the Guggenheim S&P 500 Equal Weight ETF (RSP) in 2003, has created DJD to provide investors with focused access to some of the highest-yielding securities in the Dow Jones Industrial Average (DJIA).

Comprised of 30 well-known, mega-cap US companies, the price-weighted DJIA was created in 1896 and remains one of the world’s most widely followed market indices.

“DJD will track the DJIA Yield Weighted index, which is calculated using a yield-weighted methodology that weights all securities of the DJIA by their 12-month dividend yield,” said William Belden, Guggenheim Investments Managing Director and Head of ETF Business Development.

He added: “All 30 companies in the DJIA must meet certain size, listing and liquidity requirements. Only those companies among them with a track record of consistent dividend payments over the previous 12 months are eligible for inclusion in the DJIA Yield Weighted index.

“This strategic beta approach to the DJIA should be of interest to investors as reinvested dividends historically have been a significant source of the DJIA’s total return.”

Major holdings in the fund include Chevron, Verizon, General Electric, McDonalds and Proctor & Gamble. This contrasts to the conventional price-weighted DJIA, which has Goldman Sachs, 3M, Boeing, IBM and Home Depot heading up its largest constituents.

The new fund has a net expense ratio of 0.30%.

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