Rolle im Portfolio
The iShares EURO STOXX Select Dividend 30 ETF provides equity exposure to 30 of the Eurozone’s highest dividend yielding stocks. The index correlated 94% with the EURO STOXX 50 Index and 83% with the MSCI World USD Index over the last three years; hence diversification benefits appear limited.
Given the underlying index’s well-diversified exposure across countries and sectors, the ETF may be best deployed as a core holding within a well diversified portfolio.
Moreover, the ETF is also a suitable option for those investors seeking an income generating investment. As of this writing the fund’s dividend yield was 6.15%. As the dividend yield is a function of the fund’s price, this figure can vary quite extensively over time.
Fundamentale Analyse
During the financial crisis many firms which were traditionally big dividend payers—in particular banks—had to cut their payouts and saw their share prices fall as investors fled to safe-havens. Over the last three months, banks like Santander have dropped out of the index and the overall weight of the financial sector within the index has dropped from 28% down to 22%.
Dividends play an important role in an equity portfolio as they account for a large portion of long-term stock returns. Over the last decade, the EURO STOXX 50 Gross Return Index outperformed the EURO STOXX Price Return Index by 3.8% per annum. The difference in return can be fully explained by dividends.
It is important to realise that the largest index sector exposure, telecommunications, is typically an industry that generates its revenue from its home and regional markets. As such the health of the European telecoms sector depends heavily on the Eurozone’s economic health. As the mobile business is becoming an increasingly important segment, an overall drop in consumer demand could cut into the sector’s profits. Moreover, the sector might suffer from budget cuts as big corporate and government customers look for opportunities to pare expenses. In addition, financials are also heavily exposed to the ongoing sovereign crisis. These two sectors combine to make up about 50% of the index’s total value.
The Eurozone sovereign debt crisis continues to drive the markets as Greece, Spain and Italy in particular are still struggling with their debt burdens. In addition, persistently weak economic data will make it more difficult for the governments to emerge from the current crisis and put further pressure on the ECB to provide additional stimulus, perhaps in the form of a possible rate cut to help support the peripheral countries.
The latest survey of purchasing executives for August indicated Eurozone business activity had contracted sharply, and the region looks set to fall back into its second technical recession within the last three years. In addition, the August PMI, which includes both manufacturing and services, came in at 46.6, slightly higher than in June but still indicative of contraction in the economy. Activity also slowed in France and Germany, the region’s largest economies. Data for other Eurozone countries will be released in September. Moreover, the German business confidence index fell for the fourth straight month in August. The Ifo-Index fell to 102.3; a two and half year low. This was down from a July reading of 103.2; the market had forecast a reading of 102.7. Despite a slowdown in the decline, the latest data clearly indicate that Germany is not immune to the negative effects of the debt crisis. The data also point towards a weak third quarter for the biggest economy in the monetary union; however a recession is less likely according to the Ifo-Institute.
The Eurozone’s peripheral members have had to take drastic steps to reduce their mounting government debts by cutting spending and raising taxes. Shrinking economies will result in reduced tax revenues and increased social spending which will thereby put even more pressure on these economies, and leave little room for further stimulus.
Indexkonstruktion
The EURO STOXX Select Dividend 30 Index provides equity exposure to 30 of the companies with the highest dividend yields in the eurozone. To be included in the index, component stocks have to be components of the EURO STOXX Index, have a non-negative historical five-year dividend-per-share growth rate and a maximum dividend to earnings-per-share ratio of 60%. The index is weighted according to annual net dividend yield. The number of constituents is limited to 30 and the weight of any individual holding is capped at 15%. The index is reviewed quarterly. As of writing, the index is well diversified across over 10 sectors and countries. The biggest single country exposure is France (25% of the index’s value), followed by Germany (22%) and the Netherlands (13%). On the sector level, the index’s biggest exposure is telecommunications (23%), followed by utilities (14%) and insurance (12%).
Fondskonstruktion
The iShares EURO STOXX Select Dividend 30 ETF uses physical replication to track its reference index. The fund intends to invest in all of the constituents of the EURO STOXX Select Dividend 30 Index and thereby provide exposure to the 30 highest dividend yielding companies within the euro zone. The ETF is rebalanced quarterly. The iShares ETF domiciled in Ireland engages in securities lending to generate additional revenues. During the 12 months period ending 30/06/12, iShares generated revenue of 0.48% which partially offset the TER as it is split 60/40 between the fund and BlackRock, whereby BlackRock covers the costs involved. To protect the fund from the counterparty risk that results from this practice, iShares takes collateral greater than the loan value and caps the maximum on-loan at 50%. Collateral levels vary from 102.5% to 112% of the value of securities on loan, depending on the assets provided by the borrower as collateral. Cash received as dividends from the underlying stocks is held in the fund’s income account until it is distributed to fund holders. Distributions are made on a quarterly basis. This dividend treatment can potentially create a drag on returns in upward trending markets as dividends are not reinvested into the fund. In practice this cuts both ways. It could also result in outperformance if the benchmark falls in the interim period. The fund may hold up to 20% of its NAV in securities from a single issuer in order to achieve its objectives. Under exceptional market conditions, the fund manager may invest up to 35% of the fund’s net assets in securities from a single issuer. Moreover, the fund may invest in convertibles, gilts, liquidity instruments, other transferable securities and open-ended collective investments to track the reference index. When direct investment into a component stock is not possible, the fund may, in very limited circumstances, invest in depository receipts to gain exposure to the reference index. In addition, the fund may also invest in foreign direct investments (FDIs) for direct investment purpose to achieve its objectives.
Gebühren
The fund levies a total expense ratio of 0.40%. This lies at the upper end of the range of ETFs tracking high dividend yielding equities in the eurozone.
Alternativen
As of writing, there are several ETFs tracking the EURO STOXX Select Dividend 30 Index. The largest in terms of total assets under management is the ComStage ETF EURO STOXX Select Dividend 30 ETF. ComStage uses synthetic replication to track the reference index and levies a total expense ratio of 0.25%. Investors preferring a pan-European ETF can make use of the Lyxor ETF STOXX Europe Select Dividend 30. Lyxor uses synthetic replication, levies a TER of 0.30% and offers a more diversified exposure. This alternative is especially suitable for investors with a strong view on the UK economy as the country represents 45% of the benchmark index’s value.
