Invesco launches high-dividend, low-volatility ETFs

According to Invesco, Canadian investors are increasingly seeking income from their holdings but they may be concerned about the relatively limited opportunities within the domestic equity market. Foreign equity markets may provide greater diversification.

To help investors achieve their income goals, Invesco has launched PowerShares S&P 500 High Dividend Low Volatility Index ETF (UHD) and PowerShares S&P Global ex. Canada High Dividend Low Volatility Index ETF (GHD). The initial offerings of units of UHD and GHD have now closed. Units in these ETFs will be available for trading on the NEO Exchange when the market opens today.

"For many investors, receiving a monthly dividend payment is their primary investment goal," says Christopher Doll, Vice President, Product and Business Strategy, PowerShares Canada.

UHD and GHD both provide a source of dividend income as well as growth potential from stock-price appreciation. Historically, dividends paid by companies have accounted for a significant portion of the total return provided by equities over the long term.

Both strategies invest in liquid, high-yielding equity securities from within their investment universe. By screening for dividend yield, the underlying indices are designed to provide a higher yield than their broader market benchmarks.

Following the high dividend screen, the strategies use a secondary screen for volatility, which is based on the standard deviation of price returns over the previous one-year trading period. "Screening by dividend payment alone can expose investors to unwanted risk," says Doll. "The addition of a volatility screen helps mitigate the risk that a company’s dividend yield is due to falling share value."

"S&P Dow Jones Indices continues to innovate in factor-based indices," said Shaun Wurzbach, Managing Director and Global Head of Financial Advisor Channel at S&P Dow Jones Indices. "The S&P 500 Low Volatility High Dividend Index and the S&P Global 1200 Ex-Canada Low Volatility High Dividend Index selects lower volatility high-yielding stocks of the S&P 500® and the S&P Global 1200 Ex-Canada Index, respectively, serving as benchmarks for income-seeking investors."

UHD and GHD will be available in the series illustrated in the following table:

  • UHD seeks to replicate, to the extent reasonably possible and before fees and expenses, the performance of the S&P 500 Low Volatility High Dividend Index, or any successor thereto.
  • GHD seeks to replicate, to the extent reasonably possible and before fees and expenses, the performance of the S&P Global 1200 Ex-Canada Low Volatility High Dividend Index, or any successor thereto.

Next Finance , March 9

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