New International Dividend ETF from State Street

The family of dividend-paying ETFs just got a little larger.

State Street Global Advisors on February 12th launched a new dividend-oriented exchange-traded fund, S&P International Dividend ETF (DWX). The new fund tracks the S&P International Dividend Opportunities Index, which was introduced a month ago on January 25, 2008. According to the fund prospectus, the benchmark consists of 100 highest dividend-paying stocks and American Depositary Receipts (ADRs) listed in stock exchanges included in the S&P/Citigroup Broad Market Index. The 5-year backtested performance of the index, which is measured by a 31% return, is showing in the following plot.

To be included in the index, a stock must have at least $1.5 billion in market capitalization, three-month daily trading value at least $5 million, and average monthly trading volume of 300,000 shares for six months. The index is rebalanced semi-annually in January and July.

The breakdown of new dividend ETF’s top 10 country weights is as follows.

• United Kingdom: 24.91%
• Canada: 18.29%
• Australia: 8.79%
• Sweden: 8.21%
• Italy: 7.69%
• Finland: 6.47%
• Norway: 3.69%
• Belgium: 3.66%
• Hong Kong: 3.65%
• Indonesia: 2.88%

Currently, DWX holds 98 stocks and has a gross expense ratio of 0.45%.

• More on International Dividend ETFs

Comments

[Paulo:]

There was an article on DWX that provided almost exactly the same information. I commented pointing to the currency diversification issue for U.S. investors. Specifically, 52% of DWX is allocated to three countries: Britain (24.91%), Canada (18,29%), Australia (8.79%). Okay, I'm Canadian, so no one is going to listen to me. Let me just direct you to a recently published article entitled 'Global Currency Hedging' published online by Working Knowledge of the Harvard Business School. Let me quote from the executive summary, and you can take it from there: "the euro, the Swiss franc, and a long-short position in the U.S. dollar and the Canadian dollar are negatively correlated with world equity markets. By contrast, other currencies such as the Australian dollar, the Canadian dollar, the Japanese yen, and the British pound are either uncorrelated or positively correlated with world stock markets". This has been true over the period 1975-2005, but whether going long the U.S. dollar and short the Canadian dollar might not work as well this time round.
Anyway, from a Canadian perspective, I would buy DWX if they throw out Canada, Australia, and Britain. That is more what I want (and pleeze, not 25% Japan!!!).

2008 Feb 26 05:52 PM