Analyse: db x-trackers Stoxx® Global Select Dividend 100 UCITS ETF

Nach einem sehr schwachen Jahr ist dieser Dividenden-ETF relativ gut ins neue Jahr gestartet. Große Abweichung vom MSCI Welt wegen der Gewichtung nach Dividendenrendite.

Gordon Rose 07.02.2014

 

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 78% with the MSCI World Index over the last three years and therefore offers limited 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 29 of November 2013 the fund had a dividend yield of 5.4%. In contrast, the dividend yield for the MSCI World Index was 2.4%. 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.

Because this fund’s benchmark index weights constituents by dividend yield, not by market capitalisation, investors won’t necessarily find the largest and most stable companies among its top holdings. The largest component stock of the STOXX Global Select Dividend 100 Index is Pitney Bowes Inc., representing 2.8% of the index’s value. Belgacom SA (2.3%) and Banco Santander (2.2%) complete the top three holdings.

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Fundamentale Analyse

The global dividend outlook remains attractive. Many companies have deleveraged over the past months and years, leaving huge cash reserves on their balance sheets which are now being returned to investors. Despite strong balance sheets, few companies are expected to invest their cash; instead they are buying back shares and increasing dividends. According to Markit’s 2014 US dividend outlook, 422 companies of the S&P 500 Index are expected to pay out $352bn in dividends this year. The pay-out rate would increase by 8.9% y/y, while the average pay-out rate would be 35%. A supporting factor for dividend stocks is the US Fed stance. Despite tapering, the Fed is not expected to raise interest rates before 2015. As long as the short end of the yield curve remains at current low levels, bonds will find it hard to compete with dividend stocks for yield-hungry investors.

The outlook for the US economy has improved to the point of getting closer to a full recovery from the financial crisis. The consensus forecast is for GDP to grow by at least 3% in 2014 and for the 8.7 million jobs lost during the crisis will be fully regained by H2 2014, as the economy has added 2.1 million jobs on average over the last three years. The unemployment rate has dropped to 6.7% from a record-high of 10% in October 2010. However, wage growth has not kept up pace with job creation. According to surveys, 40% of the population classify themselves as lower or lower-middle class. In theory, this could hamper consumer spending, as domestic demand accounts for roughly two thirds of GDP. However, the consumer confidence index rose to 80.7 in January after averaging out at 73.3 in 2013, while retail sales were up 4.2% in 2013 – its third consecutive annual increase.

Despite the improved performance and more positive outlook – the latter underlined by the increase in the pace of Fed tapering – the US economy is not immune to trends in a world economy which is sending mixed signals. For example, the turmoil in emerging markets has weighed on US stock market valuations after a record-breaking 2013.

The UK economic outlook has also improved. GDP grew by 1.9% y/y in 2013, its fastest rate since 2007, while expectations for 2014 have been revised upwards. The Bank of England expects GDP growth of 2.8% for 2014. However, the growth pattern is somewhat unbalanced. For example, the current account deficit widened to a 24-year high of £20.7bn (5.1% of GDP) in Q3 2013 while the public sector debt hit a new record of 76.6% of GDP. The recovery of private consumption – retail sales grew by 5.3% y/y in December – is the key engine of growth. However, overall, few expect the BoE to hike rates anytime soon.

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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 (27% of the index’s value), followed by the UK (15%) and Australia (9%). The index is heavily biased to financials which represent 32% of its value, followed by utilities (16%) and industrials (13%).

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Fondskonstruktion

As of writing, there are only two alternative providing exposure to global dividend stocks. 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 (17%), while Australia (18%) represents the largest share of the index. However, investors should keep in mind that with €5.6 million in AUM this ETF is only about 2% the size of the db x-trackers STOXX Global Select Dividend 100. However, there 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 (54% of the index’s value), followed by the UK (9%) and Japan (9%) On a sector level, financials are the biggest exposure representing about 21% 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.

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Gebühren

The fund levies a total expense ratio of 0.50%. This falls in the upper of the range for ETFs tracking global equity income. 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.

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Alternativen

As of writing, there are only two alternative providing exposure to global dividend stocks. 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%.

However, there 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 (54% of the index’s value), followed by the UK (9%) and Japan (9%) On a sector level, financials are the biggest exposure representing about 21% 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.

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Über den Autor

Gordon Rose  ist ETF-Analyst bei Morningstar.