Solactive AG is announcing the launch of the Solactive Power Factor™ High Dividend Index, which will be used as the basis for a fund issued by WBI Investments. The index tracks the performance of 50 U.S.-listed stocks among large-, mid- and small-caps, which exhibit high dividend yield and strong fundamentals, as determined by WBI’s Power Factor™ approach. By investing in the Solactive Power Factor™ High Dividend Index, investors can gain exposure to stocks that score high relative to their peers using various valuation criteria. WBI’s fund – WBI Power FactorTMHigh Dividend ETF (WBIY) – will provide an opportunity to invest in a strategy which seeks to track the index.
The Solactive Power Factor™ High Dividend Index is constructed by combining a selection of the highest-yielding dividend stocks with WBI’s Power Factor™ framework of quality investing. More specifically, the Power Factor™ methodology, trademarked by WBI and licensed to Solactive for the construction of the index, considers three fundamental metrics – Earnings to Price, Cashflow to Price and Sales to Price – to rank stocks in a broad universe of U.S. high dividend yield securities. The stocks with the highest composite quality score within their sector are chosen as index constituents. The selected stocks are then weighted according to dividend yield, with any excess weight over the maximum limit being redistributed to the remaining constituents on a waterfall basis, which means that stocks exhibiting the highest dividend yield receive the largest part of the extra weight.
Henning Kahre, Head of Research Solactive AG, stated: “The last two years have seen factor investing gaining much traction in the indexing space with a growing number of investment products tracking factor-based indices. The Solactive Power Factor™ High Dividend Index combines quality and valuation criteria. By using a multi-step selection process that accounts for differences at the sector level, the index methodology results in an index that is pretty robust in providing the targeted exposure.”
Don Schreiber, Jr., Founder and CEO of WBI, commented: “We’re introducing a smarter approach for yield starved investors at a time when the need for consistent capital growth and capital preservation is absolutely critical. As investors rush into the high-yield dividend space, we feel that WBIY will provide them with a smarter approach that pairs the search for high yielding stocks with a preference for only those companies with the strongest fundamentals.”
The Solactive Power Factor™ High Dividend Index is denominated in USD and calculated as a Price Return and Gross Total Return Index without deducting any withholding tax rate. On the selection day, all components must have a 3-month ADTV and a market capitalization in the top 70% and top 95% of the Solactive U.S. Broad Market Index, respectively. The index is readjusted quarterlyand sector weight must not exceed 20% in order to avoid concentration. The index is based on 50 constituents at the close of trading on the start date December 6, 2016.
