ETF Series Solutions To Begin Trading The Zacks Sustainable Dividend ETF Tuesday, June 5, 2012
ETF Series Solutions has announced that they will begin trading The Zacks Sustainable Dividend ETF (NASDAQ:ZDIV) Tuesday, June 5, 2012. The Fund seeks to track the price and yield performance, before fees and expenses, of the Zacks Sustainable Dividend Index. The Index is comprised of approximately 100 stocks selected, based on investment and other criteria, from a universe of the 1,500 largest listed equity companies (based on market capitalization) that pay dividends at least annually (in any amount). The universe of companies eligible for inclusion in the Index is comprised of all U.S. stocks listed on domestic exchanges, including American depositary receipts (“ADRs”) and master limited partnerships (“MLPs”). The companies in the universe are selected using a proprietary, quantitative rules-based methodology developed by Zacks Investment Research, Inc.
Total Annual Fund Operating Expenses: 0.70%
Principal Investment Strategies
The Fund employs a “passive management” investment strategy to track the Zacks Sustainable Dividend Index (the “Index”). The Fund generally will use a replication strategy to track the performance of the Index and the correlation target sought by the Fund, meaning it will invest in all of the securities comprising the Index in proportion to the weightings in the Index. However, the Fund may utilize a sampling methodology under various circumstances where it may not be possible or practicable to purchase all of the securities in the Index. The Index is comprised of approximately 100 U.S. listed common stocks selected, based on investment and other criteria, from a universe of the 1,500 largest listed equity companies (based on market capitalization) that pay dividends at least annually. The universe of companies eligible for inclusion in the Index is comprised of all U.S. stocks listed on domestic exchanges, including American depositary receipts (“ADRs”) and master limited partnerships (“MLPs”). The universe is then narrowed and ranked using a proprietary, quantitative rules-based methodology developed by Zacks Investment Research, Inc. (“Zacks” or the “Index Provider”).
The Index Provider employs a proprietary quantitative rules-based methodology that assesses various factors, including the likelihood of a dividend payment in the next 30 days, yield, liquidity, company growth, relative value, payout ratio, and other factors, and is sorted from highest to lowest. The methodology seeks to identify those companies that offer the greatest yield potential. The Index is split into two equal sub-indices of approximately 50 stocks each. The 50 constituents of each sub-index are chosen and are weighted based on liquidity and yield. At the rebalance date, the two sub-indices alternate which will be rebalanced so that each sub-index is held for a period of 61 days. Both sub-indices are determined using the same proprietary methodology. At the time of the rebalance, all stocks that have paid a dividend in the last 30 days or are included in the non-rebalanced sub-index are eliminated for the next 30 days from the investable universe. Excluding such stocks allows the Index to include only stocks that have an upcoming quarterly scheduled dividend (i.e., a scheduled dividend within the next 60 days of inclusion in the Index). Each month, one of the two sub-indices will be rebalanced and thus will result in an alternating monthly rebalance schedule between the two sub-indices. Rebalancing of the sub-indices’ allocation is restored to 50/50 on an annual basis. The Index consisted of 100 companies as of May 25, 2012.
The Fund is managed by Index Management Solutions, LLC (the “Sub-Adviser”) under the supervision of Exchange Traded Concepts, LLC (the “Adviser”). Under normal circumstances, at least 90% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in the component securities of the Index. The Fund may invest the remainder of its assets in cash and cash equivalents, such as repurchase agreements or money market instruments, or other instruments the Sub-Adviser believes will help the Fund track the Index. In general, if the Fund is performing as designed, the return of the Index will dictate the return for the Fund. The Fund pursues its investment objective regardless of the market conditions and does not take defensive positions. The Fund seeks to be fully invested at all times and will concentrate (i.e., hold 25% or more of its total assets) its investment in a particular industry or group of industries to approximately the same extent that the Index is so concentrated.
The Index is calculated and administered by NYSE Euronext U.S. Index Group, which is independent of the Fund, its investment adviser, Exchange Traded Concepts, LLC (the “Adviser”), the Investment Sub-Adviser and Index Management Solutions, LLC (the “Trading Sub-Adviser”). The Index Provider is not affiliated with the Fund, the Adviser or the Sub-Adviser. The Index Provider determines the composition of the Index and relative weightings of the securities in the Index and publishes information regarding the market value of the Index.
For the complete prospectus click: HERE