Global asset manager Russell Investments launched two high dividend yield exchange-traded funds (ETFs) today on the NYSE Arca, expanding on its line-up of next-generation solutions with focused exposure to quality companies that demonstrate higher dividend yields. The Russell High Dividend Yield ETFs are yield-focused products that seek to deliver more predictable returns, while offering an alternative to currently lower yielding fixed income products.
The Russell High Dividend Yield ETF (HDIV) and Russell Small Cap High Dividend Yield ETF (DIVS) seek to track the market capitalization-weighted Russell U.S. Large Cap High Dividend Yield and Russell U.S. Small Cap High Dividend Yield Indexes, respectively. Each of these new ETFs is composed of dividend-paying companies with quality characteristics such as their ability to pay a higher dividend yield, exhibit sustained dividend growth and deliver earnings stability. The quality characteristics of each company are then evaluated by measures of financial strength including positive cash flow, return on equity and analyst forecasts for earnings growth. Once the universe is screened for financially strong securities, the constituents are selected to help maximize dividend yield.
“These measures of financial strength were created to help investors avoid chasing dividend yield, where quality is often sacrificed in search of higher yield,” said Greg Friedman managing director of Russell’s global ETF product group. “By using quality screens embedded in the underlying transparent, rules-based indexes, we believe Russell has improved upon structural weaknesses common in traditional dividend products and brought an improved total return approach to the ETF marketplace. We’ve leveraged the best of Russell’s core capabilities to offer investors an efficient, cost-effective way to access high-dividend-paying, quality-oriented companies.”
“Russell research has shown that a total return approach that relies on a combination of dividends and capital appreciation can offer a more advantageous investment outcome than a simple dividend-yield strategy,” said David Koenig, investment strategist at Russell. “Focusing solely on dividend yield runs the risk of selecting securities that may have high dividend yields because they may be distressed and their price is falling or choosing companies that finance dividend payouts with debt.”
Today’s announcement follows the 2011 launch of the Russell Investment Discipline ETFs and the Russell Factor ETFs, as well as the re-brand of the Russell One Fund ETF. With the addition of the High Dividend Yield ETFs, Russell currently offers 26 next-generation ETFs in the U.S. market. To learn more about the Russell High Dividend Yield ETFs and Russell’s entire ETF line-up, visit www.russelletfs.com. To learn more about the underlying index methodology, visit www.russell.com/indexes/russell-high-dividend-yield.
About Russell Investments
Russell Investments (Russell) is a global asset manager and one of only a few firms that offer actively managed multi-asset portfolios and services that include advice, investments and implementation. Working with institutional investors, financial advisors and individuals, Russell’s core capabilities extend across capital markets insights, manager research, Indexes, portfolio implementation and portfolio construction.
Russell has about $141 billion in assets under management (as of 12/31/11) and works with 2,300 institutional clients, more than 500 independent distribution partners and advisors, and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell has $2 trillion in assets under advisement (as of 6/30/11). It has four decades of experience researching and selecting investment managers and meets annually with more than 3,000 managers around the world. Russell traded $1.5 trillion in 2010 through its implementation services business. Russell calculates more than 90,000 benchmarks daily covering 98% of the investable market globally, 85 countries and more than 10,000 securities. Approximately $3.9 trillion in assets are benchmarked to the Russell Indexes.
Russell is headquartered in Seattle, Washington, USA and has offices in Amsterdam, Auckland, Beijing, Chicago, Dubai, Frankfurt, London, Melbourne, Milan, New York, Paris, San Francisco, Seoul, Singapore, Sydney, Tokyo and Toronto. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow us @Russell_News.
Investors should carefully consider the investment objectives, risks, charges and expenses before investing in Russell ETFs. This and other information can be found in the prospectus, which may be obtained by calling 888-RSL-ETFS (888-775-3837) or by downloading the file from russelletfs.com. Please read the prospectus carefully before investing.
ETFs are subject to risks similar to those of stocks, including, if applicable, those related to short-selling and margin account maintenance. There is no guarantee that dividends will be paid. If stocks held by the ETF reduce or stop paying dividends, the ETF’s ability to generate income may be affected. The ETFs are passively managed and may not match or achieve a high degree of correlation with the return of their corresponding index. As with all investments, there are certain risks of investing in an ETF, and you could lose money on an investment in an ETF.
Small cap investments are subject to considerable price fluctuations and are more volatile than large cap stocks. Investors should consider the additional risks involved in small cap investments.
Not FDIC Insured. May Lose Value. Not Bank Guaranteed.
Russell ETFs and their corresponding indexes are new and have limited operating history. There is no assurance the investment process will consistently lead to successful investing. There is no assurance the stated objectives will be met.
Shares of Russell ETFs are not individually redeemable and may trade at a discount or premium to their net asset value (“NAV”). Shares may be purchased and redeemed in Creation Units only, typically consisting of aggregations of 100,000 shares. Investors may purchase or sell ETF shares throughout the day on an exchange through a securities brokerage account. All ETFs are subject to management fees and expenses.
Russell ETFs are distributed by ALPS Distributors, Inc. (“ALPS”). Russell Investment Management Company (“RIMCo,” dba Russell Investments) serves as the investment advisor to the ETFs. ALPS and RIMCo are separate and unaffiliated. Neither ALPS nor RIMCo nor any of their affiliates provides tax advice.
Michael Gelormino, 212-909-4780
Steve Claiborne, 206-505-1858
Tim Benedict, 212-702-7823
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