ETF
A Review of Canadian Dividend ETF
One of the ETFs that tracks the performance of top Canadian dividend stocks is The Claymore S&P/TSX Canadian Dividend ETF which trades on the Toronto Stock Exchange (TSX) with ticker CDZ. This ETF replicates the performance of S&P/TSX Canadian Dividend Aristocrats Index.
A company should satisfy the following criteria to become a member of the S&P/TSX Canadian Dividend Aristocrats Index:
- The company’s common stock or income trust must be listed on the Toronto Stock Exchange and must be a member of the S&P Canada Broad Market Index
- The company should have raised ordinary cash dividends every year for at least five consecutive years
- The float-adjusted market capitalization of the security is at least C$ 300M
The ETF has an asset base of $158M and the management fee is 0.60%. Distributions, if any, are done monthly. The fund has a heavy concentration in financials which accounts for about 46% of the portfolio. There are 70 companies in the portfolio with representation from the banking, energy, utility, materials, consumer discretionary and other sectors. The current yield is 5.49%. Note: All data is based on Canadian $.
To Download the constituents of the Claymore S&P/TSX Canadian Dividend ETF in Excel click here.
To download the latest FactSheet click here.
List of Country-Specific ETFs and CEFs
Some investors find it easy to invest in a country-focused fund rather than research and pick individual companies. This strategy works well since most of these funds hold the largest companies in a specific country and investing in them is relatively safer than say putting money in lesser known companies.
Many country-specific funds are available in the form of Exchange Traded Funds (ETFs) and Closed-Ended Funds (CEFs). Each have their own advantages and disadvantages. CEFs can be highly volatile during adverse market conditions. For example, to invest in Chile one can choose either the Chile ETF from iShares (ECH) or the Closed-Ended Fund, The Chile Fund (CH). ECH has $240M in assets while CH has $173M but the dividend yield for CH is 8.16%.
The table below lists the tickers of Exchange Traded Funds (ETFs) and Closed-Ended Funds (CEFs) by country:
| S.No. | Country | ETFs | Closed-Equity Fund (CEFs) |
|---|---|---|---|
| 1 | Canada | IEWC | |
| 2 | Australia | EWA | |
| 3 | UK | EWU | |
| 4 | Germany | EWG | |
| 5 | France | EWQ | |
| 6 | Austria | EWO | |
| 7 | Spain | EWP | SNF |
| 8 | The Netherlands | EWN | |
| 9 | Italy | EWI | |
| 10 | Belgium | EWK | |
| 11 | Ireland | IRL | |
| 12 | Singapore | EWS | |
| 13 | Malaysia | EWM | MAY |
| 14 | South Korea | EWY | KF,KEF |
| 15 | Japan | DXJ,ITF,EWJ,JPP,JSC | |
| 16 | Vietnam | VNM | |
| 17 | China | FXI,PGJ,GXC | CHN,GCH |
| 18 | Sweden | EWD | |
| 19 | Chile | ECH | CH |
| 20 | Brazil | EWZ | |
| 21 | Mexico | EWW | MXF,MXE |
| 22 | Thailand | TTF,TF | |
| 23 | India | IIF,IFN | |
| 24 | Russia | RSX | |
| 25 | Indonesia | IDX | IF |
| 26 | Israel | ISL | |
| 27 | Turkey | TKF | |
| 28 | Poland | PLND | |
| 29 | Taiwan | TWN | |
| 30 | Hong Kong | IEWH | |
| 31 | South Africa | EZA | |
| 32 | Switzerland | EWL | SWZ |
| 33 | Peru | EPU | |
| 34 | Colombia | GXG |
Please note that this list may not be complete as new ETFs are launched by providers. The data shown in the table is known to be accurate but do your own research before making any investment decisions.
10 Coal Stocks from the Russell Global Coal Index
Coal is still the major source of electricity generation in many countries including China, USA and others. China has plenty of coal and uses most of the coal mined for domestic power generation. In the US, coal is mined heavily from states like West Virginia and used in power plants.
One way to invest in coal stocks is to review the Russell Global Coal Index which measures the performance of all coal related stocks. There are 52 stocks from 17 countries in this index.
The ETFX Russell Global Coal Mining Fund ETF (KOAL.L) from ETF Securities tracks the Russell Global Coal Index. As of September, 2009 the Russell Global Coal Index is up 152% compared to 3.6% for the S&P 500.
The Top 10 Holdings from the ETFX Russell Global Coal Mining Fund are listed below:
1 China Shenhua Energy Co Ltd
China
2 Peabody Energy Corp. (BTU)
USA
3 Consol Energy Inc. (CNX)
USA
4 China Coal Energy Co
China
5 Bumi Resources Tbk PT
Indonesia
6 Alpha Natural Resources Inc. (ANR)
USA
7 Arch Coal Inc. (ACI)
USA
8 Walter Energy (WLT)
USA
9 Yanzhou Coal Mining Co Ltd
China
10 Massey Energy Co. (MEE)
USA
3 ETFs Offer Exposure To International Utilities
The 3 ETFs that investors can use to invest in foreign utilities are iShares S&P Global Utilities Sector Index Fund (JXI) , WisdomTree International Utilities Fund(DBU) and SPDR S&P International Utilities Sector Fund (IPU).
Among these ETFs, iShares’ JXI is the largest fund with an asset base of $165M. The distribution yield is 5.62%. In addition to foreign utilities, JXI invests in US utilities also such as Exelon (EXC) and Southern Company (SO). As of 10/31/2009 this year, the fund has a negative return of 2.19%. Last year it was down 29.15%. However the fund is an easy way to gain exposure to many foreign utilities like Iberdrola (Spain), Centrica(UK) and E.ON(Germany).
Comparison of 3 ETFs for Global Utilities:
| ETF Name | Ticker | Total Net Assets | Distribution Yield | Expense Ratio |
|---|---|---|---|---|
| iShares S&P Global Utilities Sector Index Fund | JXI | $165M | 5.62% | 0.50% |
| WisdomTree International Utilities Sector Fund | DBU | $36M | 10.42% | 0.58% |
| SPDR S&P International Utilities Sector Fund | IPU | $4M | 3.91% | 0.48% |
2-Year Performance Comparison:
Among its top 10 holdings, WisdomTree International Utilities Sector Fund has some excellent utility stocks including Fortum Oyj of Finland and Electricite de France of France. The SPDR S&P International Utilities Sector Fund (IPU) has a very low asset base of just $4M.
The Top Five European ETFs
The ETF industry continued to grow last year in Europe despite the credit crunch. Assets Under Management (AUM) grew by 6.49% from the start of the year. In 2008, the widely watched European Blue Chips Index DJ Euro Stoxx 50 dropped by 44.37%. By the end of the year, there were 1,553 ETFs listed in European Exchanges.About 67% of all ETF assets in Europe were invested in equity ETFs.
Of the hundreds of ETFs available, the following are the top five ETFs in Europe as of 2008 end based on assets held:
| S.No. | ETF | Assets Held as of December 31,2008 (in EUR Billions) |
|---|---|---|
| 1 | Lyxor ETF DJ Euro STOXX 50 | 5.14 |
| 2 | db x-trackers EONIA | 4.74 |
| 3 | iShares DJ Euro STOXX 50 | 3.6 |
| 4 | iShares S&P 500 | 3.31 |
| 5 | Lyxor ETF CAC 40 | 3.23 |
Source: ETF Industry-Europe Market Review 2008 from Lyxor Asset Management (a division of Societe Generale, France)
The number two ETF EONIA fom db-xtackers is a money-market funds cash ETF. The top ETF is the Lyxor ETF DJ Euro STOXX 50 from Lyxor with over 5.14 B EUR in assets. As of today March 11,2009 the AUM has shrunk to 4.075 B EUR. The Euro Stoxx 50 Index based ETFs occupy two spots in the list above. This is because this index gives easy exposure to the top 50 blue chip companies in the Euro Zone (excl. UK).
US-based investors can invest in the DJ Euro Stoxx Index via the SPDR DJ Euro Stoxx50 ETF (FEZ) from State Street Global Advisors. The expense ratio is 0.29% and the total net assets is $96M. The current dividend yield is 7.38% though that may fall since the index has many financials such as ING (ING) which may cut dividends. However about 80% of the portfolio is in non-financial sectors where dividends are relatively safer. France and Germany account for 70% of the portfolio.
Investing in Foreign Utilities via ETFs
Photo: Austrian Mountain Lake
We invest in utility stocks for the dividends and stable growth. While there are many utilities such as FPL Group (FPL), Exelon (EXE) in the US, many others in countries outside of the USA offer higher growth and dividend yields. Finland based Fortum and Verbund of Austria are two such examples.
One way to invest in foreign utilities is by picking up individual stocks. The disadvantage of this method is that only some of these stocks are listed in the US markets. So a better and easier way to gain exposure to foreign utilities is by investing via ETFs, which cover many of the high quality utility stocks that are beyond the reach of US investors - unless one has the ability to invest directly in overseas markets.
The SPDR S&P International Utilities Sector ETF (IPU) and WisdomTree International Utilities Sector Fund (DBU) are two ETFs that invest only in foreign utilities. The iShares S&P Global Utilities Index Fund (JXI) has both US and foreign utilities but has high allocation to overseas utilities.
Foreign Utility ETFs Overview:
| ETF Ticker | JXI | IPU | DBU |
|---|---|---|---|
| Total Assets | $231.0 M | $5.1 M | $56.0 M |
| Dividend Yield | 2.43% | 3.1% (of underlying index) | 3.59% |
| Expense Ratio | 0.48% | 0.50% | 0.58% |
| Inception Date | 9/12/2006 | 7/16/2008 | 10/13/2006 |
1.iShares S&P Global Utilities Index Fund (JXI)
JXI is the largest utility sector ETF with assets of $231M and a dividend yield of 2.43%. The fund has 69 stocks with E.ON AG of Germany as the largest holding in the portfolio. As per the fund fact sheet dated June 30,2008 US stocks accounted for 36% of the portfolio. Germany is second with two (E.ON and RWE) of the largest utilities included. E.ON is the largest utility in Germany generating one-third of the electricity used. The average annual dividend growth in the past five years has been 18.5%. RWE AG is the second largest German utility whose five year average annual dividend growth is 23.42%.
Other top stocks in the portfolio are GDF Suez(France), Iberdrola (Spain), Enel Spa(Italy),National Grid plc(UK). Exelon Corp, FPL Group and Dominion Resources are three US utilities in the top 10 holdings. Year-To-Date JXI is down 11.5%. Utility companies from Chile,Brazil,Portugal,Japan,Finland,etc. are also represented.
2.WisdomTree International Utilities Sector Fund (DBU)
The dividend yield of DBU is higher at 3.59% with the total assets of the fund being $56.0M. Though its expense ratio is slightly higher than JXI, DBU is a truly international utility sector fund since it excludes US stocks and allocates the majority of the assets to European utility stocks (about 82%), which are traditionally great performers in terms of dividend yields and capital appreciation.
DBU has 77 stocks in the portfolio GDF Suez of France accounting for 10.15%, the largest holding. Similar to JXI it has E.ON, RWE, Iberdrola, National Grid, etc. as the top holdings. Utilities from Australia,New Zealand, Austria, Norway,Hong Kong form part of the portfolio.
3.SPDR S&P International Utilities Sector ETF (IPU)
State Street Global Advisors launched this fund in July of this year with total assets of just about $5M.
Like JXI, E.ON AG is the largest holding in the fund. Germany is the top represented country but IPU gives a higher weightage for Japan unlike the other two funds above. The expense ratio is lower than the WisdomTree ETF but the asset base has not grown to the levels of JXI and DBU.
Disclosure: Long FPL,VE
