Invesco PowerShares has launched the PowerShares S&P 500 High Dividend Low Volatility Ucits ETF, firstly on the Irish Stock Exchange as of 11 May, then the London Stock Exchange from 12 May, with Euronext Paris to follow on 18 May, then Borsa Italiana, Deutsche Boerse on 21 May, and the SIX Swiss Exchange at an undetermined date.
Claimed to be the first of its kind in Europe, the ETF benchmarks the S&P 500 Low Volatility High Dividend Net Total Return index. Invesco PowerShares said that the product would offer investors access to the 50 least volatile high dividend yielding stocks on the S&P 500 index, whilst still meeting “diversification, volatility and tradability requirements”.
The way the index works is it screens the broader S&P 500 and ranks constituents in descending order of trailing 12 month dividend yields.
The top 75 are selected, with the number of stocks per GICS sector limited to 10. The 50 lowest realised volatility stocks are selected and weighted by dividend yield.
Bryon Lake, head of Invesco PowerShares – EMEA, said: “The US plays an important role in investors’ portfolios as the largest single country economy in the world. By expanding our range of smart beta tools, we can help investors gain more refined exposure to US equities.”
“We’re particularly excited about the PowerShares S&P 500 High Dividend Low Volatility Ucits ETF as it combines two of the most proven and relevant factors. The current climate of low interest rates means investors are continuing to seek yield, and are especially wary of the potential of increased volatility. By combining the high dividend and low volatility screens, we’re seeking to present investors with the best of both worlds.”