Rolle im Portfolio
The db x-trackers STOXX Global Select Dividend 100 ETF provides equity exposure to the highest dividend paying companies in America, Europe and Asia/Pacific. The index correlated 43% with the MSCI World Index over the last three years and therefore offers some diversification benefits within a broader equity allocation.
As the index is well diversified across well over 10 countries and sectors around the globe, this ETF is best deployed as a core holding in a well diversified portfolio.
During the financial crisis many firms which were traditionally big dividend payers--in particular banks--had to cut their payouts and saw their share prices fall as investors fled to safe-havens. However, cost-cutting exercises left many companies with huge cash reserves which are now being returned to investors, in some cases even topping pre-crisis dividend payout levels. In particular, the utilities sector--representing 17% of the index’s value--often attracts investors because it has historically produced strong, stable cash flows and dividends.
As of 30 of November 2012 the fund had a dividend yield of 5.1%. In contrast, the dividend yield for the MSCI World Index was 2.8%. We see this ETF as suitable for investors with a favourable outlook on the global economy and in particular for those pursuing an income-enhancing strategy.
Fundamentale Analyse
Dividends play an important role in an equity portfolio as they account for a large portion of long-term stock returns. Over the last decade, the STOXX Global Select Dividend 100 NR Index returned an annualised 7.6%, more than double the 3.0% of the STOXX Global Select Dividend 100 PR Index; thus highlighting the importance of dividends in equity returns.
Economic data into 2013 has given reasons for a more optimistic global outlook. Market participants feel increasingly confident that the worst of the European crisis is behind us. In addition, PMIs are reaching new highs across the globe, with new orders indicators in particular predicting more good news ahead.
If the world economy sees a sustained recovery, corporate earnings could improve as well. Strong earnings growth would have a positive impact on dividend pay-outs, as dividends and earnings usually grow in the same direction. Latest earning figures in the US have been slightly higher than expected. However, in Europe many countries remain in recession, which could affect company earnings.
Although overall sentiment has improved - with Asian economies in particular proving resilient and showing signs of a pick-up in output - the global outlook still faces some downside risks. For example, the US government technically avoided the feared “fiscal cliff” at the turn of the year with a last minute compromise on tax increases and spending cuts. However, the deal still implies a tightening of fiscal policy in 2013 which could negatively impact growth. Besides, uncertainty has not fully disappeared as the US Congress needs to agree on further spending cuts by March in order to lift the country’s debt ceiling.
In Europe, many risks remain as the debt crisis is yet to be fully solved, while elections in Italy and Germany bear some uncertainty for 2013. Italy elects a new government in February with former Premier Silvio Berlusconi’s potential comeback making European markets and the political landscape anxious, while Germany follows in September. With these two elections in the pipeline, much progress in solving the sovereign crisis could be unlikely. Meanwhile, the promise by British Prime Minister David Cameron of a referendum on whether the country should remain part of the EU adds further uncertainty going forward.
Indexkonstruktion
The STOXX Global Select Dividend 100 Index provides exposure to Global equities. The number of index constituents is fixed and includes the 100 highest dividend paying stocks in America, Europe and Asia/Pacific relative to their home market. Stocks are screened by historical non-negative dividend-per-share rates and dividend to earnings-per-share ratios. The constituents are weighted by their indicated annual net dividend yield and not market capitalisation. Therefore, one will find smaller companies in the index then normally expect in a broad based global index. The component stocks are capped at 15% of the index’s value and reviewed annually in March. As of writing, the heaviest country exposure is the US (23% of the index’s value), followed by the UK (16%) and Singapore (11%). The index is heavily biased to financials which represent 42% of its value, followed by utilities (17%) and telecommunications (12%).
Fondskonstruktion
The db x-trackers STOXX Global Select Dividend ETF uses swap-based replication to track the STOXX Global Select Dividend TR Index. To achieve this return, the ETF enters into a funded swap with parent bank Deutsche Bank to receive the index’s total return. The fund transfers cash from investors to Deutsche Bank which in turn posts collateral in a segregated account in the name of Deutsche Bank and pledged in favour of the fund. The fund’s collateral basket typically consists of highly liquid blue chip stocks from OECD countries and bonds, including government and corporate bonds. The haircuts are applied to these securities are posted as collateral: 7.5%-20% for equities, 10% for corporate bonds and 0% for government bonds. This typically results in over-collateralisation of the fund. Collateral value is monitored on a daily basis to ensure that the exposure to the counterparty remains over-collateralised, i.e. the net counterparty exposure (after haircuts) is maintained at zero. db x-trackers doesn’t engage in securities lending within this ETF, which further limits counterparty risk. Collateral is held in a ring-fenced account at the funds’ custodian, State Street Bank Luxembourg or the funds’ collateral manager, Bank of New York Mellon Luxembourg and reviewed daily by State Street Global Advisors (SSgA). In the case of an enforcement event—which could be any of a number of a wide range of actual and/or potential default or termination events on the part of Deutsche Bank—the ETF will be entitled by Luxembourg law at that time to enforce the pledge and sell the collateral assets without giving prior notice to Deutsche Bank. The db x-trackers STOXX Global Select Dividend ETF is a distributing fund.
Gebühren
The fund levies a total expense ratio of 0.50%. This falls in the middle of the range for ETFs tracking global equities. However, investors will incur additional costs on top of the published TER, e.g. bid-ask spreads, swap fees and brokerage fees when buying or selling ETFs.
Alternativen
As of writing, there are is no shortage of ETFs providing global equity exposure. The largest ETF in terms of total assets under management is the iShares MSCI World ETF, which uses optimised physical replication. The index is a market capitalisation weighted index representing 24 developed countries. The MSCI World is comprised of around 1600 stocks, heavily overweighting US equities (53% of the index’s value), followed by the UK (10%) and Japan (8%) On a sector level, financials are the biggest exposure representing about 20% of the index. This alternative is most suitable for investors with a stronger view on the US economy and a less bullish view on the UK compared to the ETF discussed here.
However, income-seeking investors will only find two alternatives. The largest in terms of AUM is the iShares STOXX Global Select Dividend 100 (DE) ETF, using full replication and charging a TER of 0.45%. In addition, ETF Securities offers the swap-based ETFX Dow Jones Global Dividend Fund. The index is far less biased towards the US (14%), while Australia (17%) represents the largest share of the index. However, investors should keep in mind that with €2.8 million in AUM this ETF is only about 1% the size of the db x-trackers STOXX Global Select Dividend 100.
