UBS Global Management has launched the UBS IQ Research Preferred Australian Dividend Fund (DIV) in response to demand for a higher yielding ETF from financial advisers.
The fund has been designed to generate sustainable income through the distribution of dividends and franking credits from around 40 Australian equity securities.
Stephen Small, UBS Global Asset Management's ETF capabilities manager, Australia, told ifa the dividend fund offers investors a diversified portfolio consisting of good quality stocks that will deliver strong income.
“The ETFs that UBS bring to market are research-based ETFs or smart-beta ETFs, so the underlying indexes which we track are based on the market-leading research of our investment bank,” said Mr Small.
Mr Small believes DIV will therefore deliver better outcomes compared to traditional market cap indices like the ASX 200.
According to UBS Global Management, DIV combines the liquidity and trading flexibility benefits of an ETF with the insight and expertise of UBS’s equity research analysts.
It uses a “modified free float weighting methodology” to ensure a more even allocation across large, mid and small cap securities compared to a conventional market-capitalised weighted index.
The index will be rebalanced quarterly and will hold a 15 per cent turnover cap to minimise transaction costs.
UBS Global Asset Management, Australasia's Bryce Doherty said UBS investment research has indicated defensive strategies such as sustainable income equity portfolios are likely to outperform in the next 15 years as the Baby Boomer generation retires.
“We therefore expect strong interest in DIV, our sustainable income ETF,” he said.
UBS’s first ETF was launched in Australia 12 months ago and has managed to raise close to $200 million.
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