First Trust lists US equity income ETF on Borsa Italiana

May 17th, 2017 | By | Category: Equities

London-based ETF issuer First Trust Global Portfolios has launched the First Trust US Equity Income UCITS ETF (UNCA) on Borsa Italiana, marking the first time the firm has issued an ETF on the Milan exchange.

First Trust lists US equity income ETF on Borsa Italiana

The unveiling of the First Trust US Equity Income UCITS ETF (UNCA) marks First Trust’s first ETF launch on the Borsa Italiana.

Eric Anderson, senior vice president for Europe at First Trust Advisors, said: “We are very excited of our first listing on the Borsa Italiana and 23rd listing in Europe. The Borsa Italiana is one of the most important trading venues in Europe, and is a critical exchange for providing access to pan-European investors. With this new listing, First Trust is bringing attractive and high yielding US stocks to investors in Europe.”

Silvia Bosoni, head of ETFs listing at Borsa Italiana, added: “We are pleased to welcome First Trust during this important period of growth of the Italian ETF market. The inclusion of First Trust on Borsa Italiana is a tangible proof of the interest of US ETF issuers toward the European markets, and specifically for Italy that has positioned itself as a reference point in Europe thanks to the leadership on the number of contracts traded.”

The smart beta fund, which trades in euros and is income accumulating, tracks the Nasdaq US High Equity Income Index. The index utilizes a rules-based stock selection methodology with fundamental screens and a “plough-back”-based weighting methodology to objectively select dividend-paying stocks from the Nasdaq US Index.

Companies are selected from the Nasdaq US Index based on factors such as liquidity, dividend yield and dividend growth. To be eligible for inclusion in the index, companies must meet stringent eligibility criteria including having a long-term debt-to-assets ratio less than 75%, a three-year dividend-payout ratio less than 90% and positive free cash flow. Additionally, stocks ranked in the bottom quintile by return on assets are also excluded.

Eligible securities that pass the above screens are selected for inclusion and are weighted by plough back – net income minus dividends paid – subject to a maximum weight of 3%.

The index is divided into six separate sub-portfolios, each of which receives 16.7% of the total index weight. Each sub-portfolio is rebalanced and reconstituted on a separate semi-annual schedule so that one sub-portfolio is rebalanced each calendar month. The sub-portfolios are rebalanced to their ideal weights of 16.67% once a year in December.

The fund currently has 88 constituents and its largest sector exposures are to consumer discretionary (20.5%), consumer staples (13.8%), information technology (12.2%), financials (11.2%) and utilities (11.0%). (Data as of 16 May 2017).

The fund’s total expense ratio (TER) is 0.55%.

The fund is available with a distributing share class on the London Stock Exchange, where it trades in GBP under the ticker UINC.

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