O’Leary’s O’Shares Triples The Size Of Its ETF Stable
Todd Shriber, ETF Professor, Benzinga Staff Writer
August 19, 2015 3:22pm
Few if any exchange traded funds come to market backed by the star power of the O’Shares FTSE US Quality Dividend ETF.
The O’Shares FTSE US Quality Dividend ETF, which debuted in mid-July, represented the first move into the booming ETF space by “Shark Tank” star Kevin O’Leary. O’Shares was formed by Connor O’Brien, CEO, and ABC Shark Tank investor Kevin O’Leary, Chairman, who together also co-founded O’Leary Funds.
On Wednesday, O’Shares tripled the size of its ETF lineup, adding two more dividend funds to its stable. The O’Shares FTSE Europe Quality Dividend ETF adheres to the same principles as OUSA, namely an emphasis on quality, large-cap dividend payers with a penchant for low volatility. OEUR tracks the FTSE Europe Qual / Vol / Yield Factor 5% Capped Index.
That index “is designed to measure the performance of publicly-listed large-capitalization and mid-capitalization dividend-paying issuers in Europe that meet certain requirements for market capitalization, liquidity, high quality, low volatility and dividend yield, as determined by FTSE-Russell (the “Index Provider”). The high quality and low volatility requirements are designed to reduce exposure to high dividend equities that have experienced large price declines, as may occur with some dividend investing strategies,” according to O’Shares.
British and Swiss stocks combine for nearly 63 percent of OEUR’s weight, which in a Europe-focused dividend ETF is not surprising. The UK is the second-largest developed market dividend destination after the US in terms of dividends paid while Switzerland, by way of familiar large caps such as Roche, Nestle and Novartis AG, has displayed some of the most dependable ex-U.S. developed markets dividend growth.
In addition to Novartis, Nestle and Roche, OEUR’s other top 10 holdings include Royal Dutch Shell Plc. At 12.9 percent, France is the only other country with a double-digit weight in OEUR.
OUSA and OEUR have an Asia counterpart in the form of the O’Shares FTSE Asia Pacific Quality Dividend ETF OASI follows the FTSE Asia Pacific Qual / Vol / Yield Factor 5% Capped Index.
That index “is designed to measure the performance of publicly-listed large-capitalization and mid-capitalization dividend-paying issuers in the Asia Pacific that meet certain requirements for market capitalization, liquidity, high quality, low volatility and dividend yield, as determined by FTSE-Russell (the “Index Provider”). The high quality and low volatility requirements are designed to reduce exposure to high dividend equities that have experienced large price declines, as may occur with some dividend investing strategies,” according to O’Shares.
Although Japan is historically low-yielding and far from the most impressive developed market dividend spot, that is changing as investors push for cash-rich Japanese firms to raise dividends, so it could prove beneficial that OASI allocates nearly 44 percent of its weight. Not surprisingly, the new ETF is heavily allocated to Australian stocks (23.3 percent). Australia is historically one of the highest-yielding developed markets.
Both of the new O’Shares ETFs charge 0.58 percent per year, or $58 per $10,000 invested.
Before you invest in O’Shares Investments℠ funds, please refer to the prospectus for important information about the investment objectives, risks, charges and expenses. To obtain a prospectus containing this and other important information, please visit www.oshares.com to view or download a prospectus online. Read the prospectus carefully before you invest. There are risks involved with investing including the possible loss of principal.
Concentration in a particular industry or sector will subject the Funds to loss due to adverse occurrences that may affect that industry or sector. The funds may use derivatives which may involve risks different from, or greater than, those associated with more traditional investments. The funds' emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Fund's purchase of such a company's securities. Returns on investments in foreign securities could be more volatile than, or trail the returns on, investments in U.S. securities. Exposures to foreign securities entail special risks, including political, diplomatic, economic, foreign market and trading risks. In addition, unless perfectly hedged, the Fund’s investments in securities denominated in other currencies could decline due to changes in local currency relative to the value of the U.S. dollar, which may affect the Fund’s returns. The funds' hedging strategies may not be successful, and even if they are successful, the funds' exposure to foreign currency fluctuations is not expected to be fully hedged at all times. See the prospectus for specific risks regarding the Fund.
The securities of small capitalization companies are often more volatile and less liquid than the stocks of larger companies and may be more affected than other types of securities during market downturns. Compared to larger companies, small capitalization companies may have a shorter history of operations, and may have limited product lines, markets or financial resources.
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