New ETFs On The Block: RevenueShares Ultra Dividend Fund (RDIV)

105487691With the Federal Reserve deciding to hold off its much-anticipated taper last month, many market participants now believe that record low interest rates are likely to continue for a bit longer than previously thought, suggesting dividend funds may be a better option in the short and medium haul.

Though the dividend-income space became fairly crowded after a number of providers launched new dividend ETFs over the past few month, RevenueShares created a new income-rich option with the launch of the Ultra Dividend Fund (RDIV) in an attempt to replace low fixed-income yields with high dividend paying equities.

RevenueShares is the first-to-market a “revenue-weighted” dividend ETF, a strategy that looks to give investors a way to target income-producing equities in the US market by focusing on weighting by revenue rather than market capitalization. RDIV achieves this tracking the Ultra Dividend Index, a combination of dividend and revenue-weighted securities from the benchmark S&P 900 index.

The RevenueShares Ultra Dividend Index is comprised of 60 securities that have the highest quarterly dividend yields over the past 12 months, which are then assigned weights based on the company’s revenue.

The index is rebalanced quarterly based on the constituents’ top line earnings as of the previous quarter and has yielded 4.92 percent on an annualized basis as of September 30, 2013.

RDIV’s portfolio is fairly well diversified and provides meaningful exposure to a wide array of sectors including utilities (39.26 percent), telecommunication (16.8 percent), consumer staples (12.3 percent), industrials (8.84 percent), financials (6.7 percent) and energy (6.4 percent) with utilities clearly cornering the highest asset allocation. The top holdings include Lockheed Martin (5.1 percent), AT&T (5 percent), Duke Energy (5 percent) and ConocoPhillips (5 percent).

RDIV is likely to face tough competition from more established players in the dividend-centric fund space, including the iShares High Dividend ETF (HDV), the Vanguard High Dividend Yield ETF (VYM) and the WisdomTree LargeCap Dividend ETF (DLN). However, with a yield of nearly 5 percent, RDIV should prove to be a decent choice, particularly when inflation remains fairly benign.

The fund charges 49 basis points in annual fees.

Disclosure: No holdings

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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