One Unsung ETF That Could Offer a Tentative Safety Net
Overall, Russell Equity Income is probably one of the better new ETFs of 2011 that no one is talking about.
That's good news for income investors who are suffering in an environment of historically low interest rates and yields on Treasuries that hardly make them worth the trouble. Of course, the big three of the ETF universe, iShares, State Street Global Advisors, and Vanguard, have plenty of options for income investors, but sometimes it pays to look off the beaten path.
Enter the Russell Equity Income ETF (EQIN), part of the suite of 10 ETFs that focus on various investment disciplines introduced by Russell Investments earlier this year. The Russell Equity Income ETF made its debut in mid-May, and considering a crowded field and tricky market environment, the ETF has done an admirable job of attracting assets under management with over $9.3 million.
Home to almost 260 stocks and an expense ratio of 0.37%, at first blush, EQIN looks like it will be the typical blue-chip/dividend/value play -- something that could rival the Vanguard Dividend Appreciation ETF (VIG) or the Vanguard Value ETF (VTV).
And yes, EQIN does hold familiar dividend names such as Abbott Laboratories (ABT) and 3M (MMM), along with a bunch of other Dow stocks. (Nine of the top 10 holdings are Dow stocks.) That said, EQIN features a few more mid-cap and growth names than the typical dividend ETF, and we view that as a positive.
But if you need to feel safe, the mission of EQIN is clear. The ETF includes stocks that are expected to pay a dividend based on consensus one-year dividend forecasts or have paid a dividend in the past year. EQIN excludes stocks with high variability in earnings as measured by high earnings per share volatility over the past five years, low profitability as demonstrated by a low return on equity over the past five years, or forecasted negative earnings over the next year, according to the ETF's fact sheet.
The 18% allocation to financials isn't what we like to see, but four other sectors -- durables, health care, energy, and utilities -- also get double-digit weights. Overall, EQIN is probably one of the better new ETFs of 2011 that no one is talking about.
Editor's Note: This content was originally published on Benzinga.com by the ETF Professor.
Below, find some more great ETF and market content from Benzinga:
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter