First Trust goes to government for high yields
First Trust is listing two new funds on Nasdaq. The first aims to achieve dividends, The First Trust SMID Cap Rising Dividend Achievers ETF (SDVY). The second aims to do something interesting: hunts for high yields among government bonds, the First Trust Municipal High Income ETF (FMHI).
FMHI will invest in debts from US municipal governments, which include states and territories, as well as territories like Puerto Rico. The interest payments on municipal debts are exempt from federal income tax.
According to the prospectus, FMHI can invest in more or less any kind of municipal government bond. In order to achieve high yields from government debts, FMHI stops itself from buying investment grade bonds. "The Fund may not invest more than 50 percent of its net assets in Municipal Securities that are, at the time of investment, rated investment grade," the prospectus says. And remains majority invested in junk government bonds.
SDVY will track a Nasdaq-managed index, that puts together 100 small and mid-cap companies with a track record of paying solid dividends and judged as likely to continue doing so.
To qualify in the index, companies need to be of a particular size. They need to be big enough to have a market cap of at least $500m. Yet they must also be small enough that they do NOT qualify as large-cap companies.
Companies dividends must also meet certain criteria. Dividends and earnings both need to have grown over the past three years. Companies must also have a cash-to-debt ratio above 25 percent. Finally, they must have a trailing 12-month payout ratio under 65 percent, the prospectus says.
Amundi lists new market neutral smart beta ETF
Amundi is listing a new ETF in Paris next week that aims to be multi factor while also being "market neutral", the Amundi iSTOXX Europe Multi-Factor Market Neutral UCITS ETF (MKTN).
MKTN tracks the iSTOXX Europe Multi-Factor Market Neutral index, which is a complicated index, so far as they go. The index works by putting together two iSTOXX indexes. First is the iSTOXX Multi Factor index, which harvests factor premiums from European equities. Second, and in order to be "market neutral", it takes a short position on the iSTOXX Europe 600 Futures index to hedge against any market movements.
The index summary can be viewed here. No product fact sheet was available at the time of writing.
UBS lists inflation proof bonds in London and Milan
In addition to Switzerland, UBS is listing its mid and long-term inflation-proof bond ETFs in London and Milan. It is also listings its diversified emerging markets bond fund in Milan. The funds' names and tickers are:
- UBS ETF - Bloomberg Barclays Euro Inflation Linked 1-10 UCITS ETF (INFL1, UBIF)
- UBS ETF - Bloomberg Barclays Euro Inflation Linked 10+ UCITS ETF (INFL10)
- UBS ETF - J.P. Morgan USD EM Diversified Bond 1-5 UCITS ETF (SHEMB, SEMC)
Yesterday's Daily Monitor said that Invesco PowerShares' SDJSML was a new listing in Milan and aimed to benefit from the Italian government's new PIR tax exemptions. This was incorrect on two fronts. First, SDJSML is not a new listing: it was listed on Xetra in March 2009. Second, it does not qualify for PIR tax exemptions as it tracks European small caps and has an Italian weighting of only 6 percent. Our apologies to Invesco for the misreporting.