Korea Investment Management announced on May 8 that it will list three new exchange-traded funds (ETFs) focused on dividend growth stocks on May 13.
The three new products introduced by Korea Investment Management are: ▲ACE US Dividend Quality ETF ▲ACE US Dividend Quality + Covered Call Active ETF ▲ACE US Dividend Quality Bond Mix 50 ETF. These three products are based on the WisdomTree US Quality Dividend Growth ETF (DGRW), which is managed by the US asset management company WisdomTree, and will offer monthly distributions.
DGRW is a US-listed ETF that emphasizes both dividends and growth, and was listed in May 2013. This ETF features a portfolio centered on technology stocks with high potential for future dividend growth. While its annual dividend yield is 1.79%, its total return (TR) over the past five years as of the end of April is 101.51%. This is 18.72 percentage points higher than the Schwab US Dividend Equity ETF (SCHD), a US dividend ETF familiar to Korean investors. Another notable point is volatility. During the same period, DGRW's annual volatility was 14.81%, which is lower than SCHD's 15.86%.
The ACE US Dividend Quality ETF is referred to as the "Korean-style DGRW," tracking the underlying index of DGRW (WisdomTree U.S. Quality Dividend Growth Index (Price Return)) converted into Korean won. This index is calculated and published by WisdomTree and includes about 300 US-listed companies that pay stable dividends and demonstrate strong earnings growth and quality.
The ACE US Dividend Quality + Covered Call Active ETF and ACE US Dividend Quality Bond Mix 50 ETF are being introduced to expand investor options. The ACE US Dividend Quality + Covered Call Active ETF aims for a higher distribution rate by investing in US high-dividend stocks that have a high correlation with the DGRW strategy, as well as domestic and international covered call ETFs. The ACE US Dividend Quality Bond Mix 50 ETF adds bonds to the DGRW investment strategy to reduce volatility. The bonds included in the ACE US Dividend Quality Bond Mix 50 ETF are government bonds and monetary stabilization securities with remaining maturities of less than two years.
The underlying indices for these two products are the "Bloomberg WisdomTree U.S. Quality Dividend & B500 Premium Decrement 50:50 Index (PR)" and the "Bloomberg WisdomTree U.S. Quality Dividend & Short Term KRW Bonds 50:50 Index (TR)," both converted into Korean won.
Korea Investment Management will also hold a seminar on May 13 to commemorate the new listing of the ACE US Dividend Quality series. The seminar will be attended by Korea Investment Management President Bae Jae-kyu, Head of ETF Management Division Nam Yongsoo, and WisdomTree Chief Investment Officer (CIO) Jeremy Schwartz, among others.
Nam Yongsoo, Head of ETF Management Division at Korea Investment Management, said, "We are launching the ACE US Dividend Quality series, a Korean-style DGRW, to diversify US dividend investment options for domestic investors," adding, "Although the distribution rate is lower than the US Dividend Dow Jones ETF, the stock price growth rate is higher and the risk is lower, making it highly useful for long-term investment within pension accounts."
He added, "Depending on your investment objectives, you can choose between the ACE US Dividend Dow Jones ETF and the ACE US Dividend Quality series as your investment destination."
All ACE ETFs are performance-based dividend products, and principal losses may occur depending on investment results.
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