Russell's two new ETFs target both dividend yield, total return

By Toni Weeks

San Diego, March 15 -Russell Investments announced in a press release that the Russell High Dividend Yield ETF and Russell Small Cap High Dividend Yield ETF began trading Thursday on the NYSE Arca under the symbols "HDIV" and "DIVS," respectively.

Both ETFs use transparent, rules-based indexes and quality screens to provide exposure to companies with higher dividend yields and more predictable returns.

The Russell High Dividend Yield ETF seeks investment results that closely correspond to the total return of the Russell U.S. Large Cap High Dividend Yield Index, while the Small Cap High Dividend Yield ETF seeks investment results that closely correspond to the total return of the Russell U.S. Small Cap High Dividend Yield Index. As previously reported, each fund will invest at least 80% of its total assets in securities that comprise its benchmark index.

"These measures of financial strength were created to help investors avoid chasing dividend yield, where quality is often sacrificed in search of higher yield," Greg Friedman, managing director of Russell's global ETF product group, said in the release.

"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."

That approach, which encompasses both dividend yield and capital appreciation, offers a more advantageous outcome than a simple dividend-yielding strategy, according to 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," he said.

Rich Johnson will serve as the portfolio manager of both funds.

Seattle-based Russell Investment Management Co. is the funds' investment adviser.

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