Reality Shares, which launched its first ETF in late 2014, has followed up with an early 2016 launch of three similarly themed ETFs:
- Reality Shares DIVCON Leaders Dividend ETF (LEAD)
- Reality Shares DIVCON Dividend Defender ETF (DFND)
- Reality Shares DIVCON Dividend Guardian ETF (GARD)
The firm’s original ETF, the Reality Shares DIVS ETF (DIVY), is described by the firm’s Executive VP Ryan Ballantyne as a “honey badger.” According to Morningstar, the fund’s NAV-based performance for 2015 was 2.24%, and ranked as the #1 ETF in Morningstar’s Multi-Alternative category.
The new Leaders Dividend ETF is a long-only strategy “long only” and seeks to invest in large-cap U.S. companies with the highest probability of increasing their dividends within a year. The investment selection is based on Reality Shares’ proprietary DIVCON dividend health scoring system.
Two Long/Short ETFs
The Dividend Defender ETF (DFND) and Dividend Guardian ETF (GARD), by contrast, employ long/short strategies that were first described in our October write-up on the funds’ pending launches. Both the Defender and Guardian ETFs track indices that are based on the idea that companies that increase their dividends tend to outperform the broad market, and companies that cut or suspend their dividends tend to underperform the broad market.
Under Reality Shares’ proprietary methodology, the 500 largest U.S. companies are assigned ratings based on how likely they are to raise or cut their dividends, and selections for the long and short portfolios are made on these bases. The difference between the two ETFs is that while the Defender ETF always has both long and short exposure (75% long and 25% short), the Guardian ETF uses a dynamic hedge based on the company’s Guardian Indicator and may shift from 100% long exposure to a 50% long / 50% short position (a market neutral position) when the market is forecast to decline.
Research Driven Indices
All of Reality Shares’ dividend-themed ETFs follow the company’s custom DIVCON indices. The Reality Shares DIVS Index is the first index designed to isolate and capture dividend growth, rather than dividend income.
For more information, visit realityshares.com.
Past performance does not necessarily predict future results.
Jason Seagraves contributed to this article.