PowerShares ETFs screen for high dividends, low volatility

Morningstar Canada 7 March, 2017 | 6:00PM
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PowerShares S&P 500 High Dividend Low Volatility Index (UHD) and PowerShares S&P Global ex. Canada High Dividend Low Volatility Index (GHD) -- which both seek to generate above-average dividends with below-market volatility -- opened for trading today on the NEO Exchange.

Along with screening for high dividend yields, the two strategies also screen for volatility, based on the standard deviation of price returns over the previous one-year trading period. "The addition of a volatility screen helps mitigate the risk that a company's dividend yield is due to falling share value," Christopher Doll, vice- president, product and business strategy, PowerShares Canada, said in a release. PowerShares Canada is a division of Invesco Canada Ltd.

The U.S. equity ETF also offers units (UHD.F) that hedge the U.S.-dollar exposure back to the Canadian dollar, and U.S.-dollar-denominated units (UHD.U). The global equity ETF has a currency-hedged version (GHD.F).

The management fees, which also cover most expenses, are 0.35% for the U.S. ETF and 0.55% for the global one.

Though the new ETFs provide foreign diversification, they lack the tax advantages of Canadian dividend-paying funds, since foreign dividends aren't eligible for the federal dividend tax credit.

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