Vident Launches Multifactor Real Estate ETF

Vident Financial LLC has injected the multifactor approach into what it says is traditionally a market-cap-weighted sector with the launch of the PPTY—U.S. Diversified Real Estate ETF (PPTY). Vident says it does a deep-dive analysis of the properties held by the real estate companies in the fund’s underlying rules-based index in order to build a portfolio that’s diversified by location and property type. It also favors companies with prudent leverage, as measured by the debt-to-enterprise value ratio of real estate investments. Individual securities are capped at 4% during the index’s semiannual reconstitution and rebalancing.

Regarding the location of properties, the fund’s index sets stable geographic targets to deliver diversification within each property type. As for property diversification, the index applies fixed allocations to each property type to ensure sufficient diversification. The largest allocations are to core property types such as residential, office, industrial, retail and the “diversified” category because of their established track records of delivering stable income, inflation protection and growth.

The expense ratio is 0.53%.
 

Cboe Vest ETF Aims To Top Yield Of S&P 500

In an attempt to add some juice to a lackluster yield environment, Cboe Vest Financial LLC has introduced an exchange-traded fund that aims to provide annualized income of roughly 3% over the annual dividend yield of the S&P 500 index. The Cboe Vest S&P 500 Dividend Aristocrats Target Income ETF (KNG) follows an index that tracks an equal-weighted portfolio of optionable stocks in the S&P 500 Dividend Aristocrats index.

The KNG fund’s strategy entails buying stocks in the S&P 500 Dividend Aristocrats and writing, or selling covered call options on a partial amount of each stock each month. The indicated dividend yield on the S&P 500 was recently 2%, which means KNG would generate income of about 5% if its strategy works as advertised. The fund’s strategy would never write options on more than 20% of the portfolio, however, and the strategy historically has kept that in the range 6% to 15%.

KNG’s expense ratio is 0.75%.

 

Direxion Debuts “Leveraged Lite" ETFs For Advisors

Who knew that leveraged exchange-traded funds could be long-term investments?

According to Direxion, the half dozen 1.25x leveraged ETFs it has rolled out are built to be long-term holdings that potentially provide a boost to traditional asset allocation strategies by providing 25% additional exposure to broad-based equity indexes, along with one fixed-income product. The expense ratios for these funds range from 0.30% to 0.49%.

Direxion is known primarily for its extensive lineup of 2x and 3x leveraged funds primarily used as short-term tactical trading tools by institutional money managers, hedge funds and active self-directed retail investors. But the company says its new suite of 1.25x Portfolio+ ETFs target a different base of users who subscribe to passive investing and do so via ETFs—a target market that includes financial advisors.

In simple terms, these ETFs enable investors to get $1.25 worth of daily exposure to a benchmark index for every $1.00 invested. Direxion says this product structure brings little change to a portfolio’s risk profile.

According to Direxion, these are not funds aimed at “set it and forget it” types. Rather, they’re for investors who monitor their portfolios and believe they can benefit from “manageable” levels of added daily exposure.

 

Davis Expands Actively Managed ETF Lineup

The Davis Select International ETF (DINT) is the fourth actively managed exchange-traded fund from New York City-based money manager Davis Advisors.

The fund is market-cap agnostic and will invest in companies with businesses outside of the U.S. The net expense ratio is 0.75%, and the fund is managed by Danton Goei, who joined Davis Advisors in 1998.

DINT is the ETF version of the Davis International Fund. That mutual fund had $289 million in assets through the first quarter, and at the end of 2017 it had nearly half its portfolio invested in Asia and 32% in Europe.

According to Morningstar, that mutual fund easily bested its bogey, the MSCI ACWI ex USA Index, over three- and five-year periods, while topping it by a slimmer margin over 10 years.