NYSE Euronext has announced the launch of the NYSE Diversified High Income Index, a new strategy index measuring the performance of a highly diversified, multi-asset portfolio of high yielding securities. The index has been licensed to UBS to underlie the newly launched NYSE Arca-listed ETRACS Diversified High Income ETN (DVHI).
The strategy provides exposure to a basket of 138 publicly traded securities that provide exposure to several different asset classes, sectors and segments across multiple geographies that have historically paid high dividends or distributions.
The index’s features and construction seek to highlight yield while the diversity of the index constituent sectors seeks to minimise volatility.
Commenting on the launch, Nicholas Aninos, Vice President, Global Index and Exchange-Traded Products, NYSE Euronext, said: “The NYSE Diversified High Income Index is an opportunity for our customers to use a diversified index to structure investments in high dividend-paying securities across multiple asset classes and sectors.”
Eligible securities include Business Development Companies (BDCs), Master Limited Partnerships in the energy industry (energy MLPs), mortgage Real Estate Investment Trusts (mortgage REITs), Real Estate Investment Trusts (REITs), US-listed equities, and exchange-traded funds (ETFs) representing international equities, municipal bonds, high-yield bonds, emerging markets bonds and preferred stock.
The index is split between equities (60%) and fixed income and related assets (40%). The equity component comprises BDCs (15%), energy MLPs (15%), mortgage REITs (7.5%), REITs (7.5%), US-listed equities (7.5%) and ETFs representing international equities (7.5%). The fixed income and related assets component comprises ETFs representing municipal bonds (10%), ETFs representing high-yeld bonds (10%), ETFs representing emerging markets bonds (10%) and ETFs representing preferred stock (10%).
Index constituents must satisfy certain dividend yield and frequency criteria, liquidity criteria and other eligibility requirements. Constituents within each non-ETF sector are proportionally weighted by their unadjusted market capitalisations within their respective non-ETF sectors. Constituents that are ETFS are proportionally weighted by their assets under management within their respective ETF sectors.
As at launch, the index held the following ETFs:
SPDR S&P International Dividend ETF (DWX)
SPDR S&P Emerging Markets Dividend ETF (EDIV)
Global X SuperDividend ETF (SDIV)
iShares Dow Jones International Select Dividend Index ETF (IDV)
Market Vectors High Yield Municipal Index ETF (HYD)
SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB)
PowerShares Insured National Municipal Bond Portfolio ETF (PZA)
High Yield Bonds
iShares iBoxx $ High Yield Corporate Bond ETF (HYG)
Emerging Markets Bonds
PowerShares Emerging Markets Sovereign Debt Portfolio ETF (PCY)
iShares S&P US Preferred Stock Index ETF (PFF)
PowerShares Preferred Portfolio ETF (PGX)
PowerShares Financial Preferred Portfolio ETF (PGF
SPDR Wells Fargo Preferred Stock ETF (PSK)
Investors looking for access to a multi-asset income portfolio in ETF format could consider one of the following: the First Trust International Multi-Asset Diversified Income Index ETF (YDIV), the iShares Morningstar Multi-Asset Income Index ETF (IYLD), the Arrow Dow Jones Global Yield ETF (GYLD), the Guggenheim Multi-Asset Income ETF (CVY) and the SPDR SSgA Income Allocation ETF (INKM), all US-listed.