After markets closed on October 23, 2015, China cut its benchmark interest rate for the sixth time since last November. One way to combat decreasing interest rates in a portfolio is to look to dividend themed strategies. Under the Dividend Achievers brand, Nasdaq offers indexes with exposure to dividends in multiple parts of the world. For this region, Nasdaq offers the Nasdaq Asia Ex Japan Dividend Achievers Index.
Why utilize this index as your dividend benchmark for the region?
The index is built, as all Nasdaq Dividend Achievers Indexes are, around a track record of increasing dividends. After extensive research, it was determined that three years of increasing dividends was the optimal time horizon for securities in this region. In addition to the dividend achievers requirement, there is a dividend sustainability aspect to this methodology, ensuring that securities that have the dividend track record are also positioned to maintain that through positive historical cash flows. Lastly, as with all Nasdaq tradable indexes, there are minimum eligibility requirements that each security must pass including minimum liquidity and size thresholds.
Sufficient Exposure to China and the rest of Asia
As expected, the index has very high historical and current exposure to China. As you can see below, the index had a 28% weight in China as of the most recent quarter end. Other than China, the index offers broad diversification to nine other countries in Asia.
Yield
The index has had a very consistent yield and it is currently at 3.5%. Comparing the index to its benchmark (NQASPAXJP), the index has higher historical yield year-to-date over almost every period.
Conclusion
Whenever reaching for yield, one has the option to go the fixed income or equity route. If one has concerns about the fixed income route due to the rate environment or are looking to go the equity route, one solution may be a basket of stocks that have a strong dividend track record and dividend sustainability. The Nasdaq Asia Ex Japan Dividend Achievers Index offers both of those aspects in addition to a high historical allocation to China (between 25% and 40% historically) and a consistent yield around 3.5%.
Nasdaq® is a registered trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED. © 2015. Nasdaq, Inc. All Rights Reserved.
NASDAQ OMX announced the following 21 NASDAQ Indexes are now available to clients of Informa Investment Solutions' Zephyr StyleADVISOR. They will also be launched within Informa Investment Solution's PSN Enterprise in the coming months. Eighteen of the indexes are within the NASDAQ Global Index Family, and are comprised of nearly 9,000 global securities with a combined $41.8 Trillion float-adjusted market cap.
The remaining three indexes are from the NASDAQ Dividend Achiever family - a robust series of income-oriented indexes tied to exchange traded products (ETPs) that track nearly $20 billion in assets under management (AUM).
John Jacobs, Executive Vice President, NASDAQ OMX Global Information Services, addresses the growth of Dividend & Income Index Strategies in the first installment of his video series.
Transcript: Since 2007, 2008, since the financial crisis, it’s been very difficult for institutional and individual investors to find yield. So dividend investing has a lot of advantages because it guarantees investors a yield on their portfolio instead of just relying on the performance of the stock, or the underlying stocks in the ETF. So with the acquisition of the Dividend Achievers suite of products, we can marry that with our income family of products and offer investors a suite of different indexes to use. The indexes are a basis for a variety of ETFs and other types of products and it’s another stepping stone for NASDAQ as we continue to build out our Global Index business, which has become multi-asset class and, as well, multi-different investment style.
NASDAQ OMX Global Indexes has partnered with Hennion & Walsh to offer the SmartTrust® NASDAQ International Dividend Achievers Trust, Series 1. This new investment vehicle gives customers access to the NASDAQ Dividend Achievers brand and the underlying companies it represents.
The two-year Trust seeks to pursue its objective by investing in a portfolio consisting of the publicly-traded foreign securities comprising the NASDAQ International Dividend Achievers™ Index. The objective of the Index is to track the performance of certain foreign securities with at least five consecutive years of increasing regular dividend payments.
“NASDAQ OMX has built its Global Index business to collaborate with sponsors like SmartTrust® to offer increased access to liquidity, transparency and cost efficiency,” said Rob Hughes, Vice President, Global Information Services.
The security types eligible for the Index include American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), limited partnership interests, ordinary shares and shares of limited liability companies.
“Our index licensing arrangement with NASDAQ OMX provides for an excellent complement to our existing suite of equity-based income solutions at SmartTrust®,” said Kevin Mahn, President and Chief Investment Officer, Hennion & Walsh Asset Management, one of the nation’s premier providers of investment services and an advocate for individual investors.
“Whereas the majority of our current equity-based income solutions are largely U.S. focused, the SmartTrust®, NASDAQ International Dividend Achievers Index Trust will add an internationally focused strategy that still has an income component at its core. We believe that the new relationship with NASDAQ OMX, and their underlying International Dividend Achievers index strategy, is well positioned for the current market environment and will be very positively received by the many financial advisors that we work with around the country.”
According to Hennion & Walsh, though December 5, 2013, total assets in SmartTrust® have grown over 142% since 2010 while the number of Trusts outstanding at SmartTrust® have grown over 314% over that same time period. Today, SmartTrust® has 58 Trusts outstanding, with 12 of these Trusts currently being available for purchase in the primary market.
“We believe the launch of this new Trust is well timed, as the European market continues its recovery,” said Bill Walsh, Chief Executive Officer of Hennion & Walsh. “This Trust allows the advisors we work with to add strength and stability to their clients’ international equity allocations.”
Hennion & Walsh has wholesalers around the country who are dedicated to serving advisors and investors. For more information about the SmartTrust® NASDAQ International Dividend Achievers Trust or any other SmartTrust® UIT product, please contact the firm’s Internal Support Desk at 888-505-2872 or visit www.smarttrustuit.com.
NASDAQ OMX will launch an additional four Canadian currency Dividend Achiever indexes on Wednesday, June 19th. These indexes will be calculated in Canadian dollars and will access Canadian currency denominated dividend-pairing stocks. The new Canadian Dividend Achievers are:
- NASDAQ U.S. Dividend Achievers Select Currency Hedged CAD Index (DVGCADH)
- NASDAQ U.S. Dividend Achievers Select Currency Hedged CAD Total Return Index (DVGTCADH)
- NASDAQ U.S. Dividend Achievers Select CAD Index (DVGCAD)
- NASDAQ U.S. Dividend Achievers Select CAD Total Return Index (DVGCADTR)
The new indexes were created off of the Dividend Achievers Select (DVG) index and are a part of the Dividend Achievers, a group of indexes tracking companies with at least 10 years of consecutive dividend growth. The Dividend Achievers are a part of the NASDAQ Dividend and Income Family.
