BlackRock launches iShares global and European quality dividend ETFs

Jun 20th, 2017 | By | Category: Equities

BlackRock has rolled out two new iShares ETFs tracking high income companies which have been screened for strong financial health and sustainable dividend payments. The funds have begun trading on the London Stock Exchange and offer global or European targeted exposure.

BlackRock launches iShares global and European quality dividend ETFs

The new iShares quality dividend ETFs invest in global and European companies with strong sustainable dividend payments.

The iShares MSCI World Quality Dividend UCITS ETF (WQDV) tracks the MSCI World High Dividend Yield Index, composed of large and mid-capitalisation companies worldwide with higher than average dividend income and quality characteristics, relative to the broader global equity market.

Index construction starts by screening securities from the MSCI World Index to select those with a track record of consistent dividend payments. Securities are screened based on certain “quality” factors such as return on equity, earnings variability, debt to equity, and on recent 12-month price performance. The goal is to exclude stocks with potentially deteriorating fundamentals that could be forced to cut or reduce dividends. From the list of eligible companies, only those with higher than average dividend yields are selected for inclusion in the index. Issuer weights are capped at 5%. The index is market cap weighted and rebalanced semi-annually in May and November.

The index also reviews its quality screens and stocks’ 12-month past performances to omit those with potentially deteriorating fundamentals that could force them to cut or reduce dividends.

Similar to most global equity funds, the ETF has half its exposure to firms listed in the US, while Switzerland (10.0%), the UK (9.2%) and Canada (5.5%) make up the next largest country allocations. The largest sector allocations are to consumer staples (20.1%), healthcare (13.9%), financials (11.8%) and industrials (10.4%).

The fund has 270 constituents of which the largest single holding is Exxon Mobil (4.1%). Also included in the fund’s top ten holdings are well known stable portfolio names such as Nestle, Procter & Gamble, Pfizer, Coca-Cola and Novartis.

WQDV is a physically replicating fund and comes with a total expense ratio (TER) of 0.38%. Apart from trading in US dollars, the fund also offers a British pound-denominated share class which trades under the ticker WQDS.

The iShares MSCI Europe Quality Dividend UCITS ETF (EQDV) tracks the MSCI Europe High Dividend Yield 4% Issuer Capped Index.

It applies a similar screening process as its globally focused equivalent which reduces the parent MSCI Europe Index from 446 constituents to 56. Holdings are capped at 4% at time of rebalance however and the largest single constituents are Allianz, Muenchener, Axa, AstraZeneca, Zurich Insurance and Swiss RE which have all reached their maximum allowable allocation.

The UK by far represents the largest country exposure with 37.7% with France (14.5%), Germany (13.8%) and Switzerland (11.3%) making up the next largest allocations. The largest sector exposures are to financials (35.8%), consumer discretionary (20.1%) and utilities (14.5%).

EQDV trades in euros, is also physically replicating and has a TER of 0.28%. Investors may also access a British pound-denominated version of the fund under the ticker EQDS.

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