RED BANK, N.J.--(BUSINESS WIRE)--WBI Investments, Inc. a leading provider of institutional and private client wealth management strategies led by Don Schreiber, Jr., today introduced its first smart beta exchange traded fund – WBI Power Factor™ High Dividend ETF (NYSE Arca: WBIY). The fund seeks to provide investment results that correspond to the price and yield – before fees and expenses – of the Solactive Power Factor™ High Dividend Index, which the fund will be tracking.
“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,” said Schreiber, co-author of All About Dividend Investing (McGraw Hill 2011). “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.”
WBI is an innovator in the ETF space, and among its most successful entrants. When the firm launched its suite of 10 actively-managed WBI Shares ETFs in August of 2014, it achieved a historic milestone, surpassing $1 billion in assets on the first day of trading. The firm has $1.9 billion in assets under management, and its funds have approximately $1.07 billion in ETF assets under management (as of 12/13/16).
To learn more about how WBIY works, visit High Quality, High Yield – WBIY.
The Power Factor™
WBIY seeks to achieve its investment objectives utilizing a unique Power Factor™ approach to rationalizing investors’ needs for high current income and capital growth with lower volatility and lower risk than traditional approaches. WBIY seeks these objectives by tracking the investment results of the Solactive Power Factor™ High Dividend Index. The Power Factor™ approach aims to rank the top 50 highest-yielding dividend stocks by combining– Earning to Price (E/P), Cash Flow to Price (CF/P), and Sales to Price (S/P). These factors are applied to roughly 3,000 securities (large- to small-cap domestic securities) and then ranked. The ranking system applies thresholds based on the combination of the highest quality fundamentals and highest yield across the universe.
Schreiber said another dynamic of WBI’s approach to building a smarter - smart beta product is WBIY’s quarterly rebalance schedule, which will tend to favor companies that have the highest ranked combination of yield and fundamentals. Rebalancing quarterly can help limit turnover and extreme exposure to particular sectors, component weights or other investment style factors, such as recently announced or implemented dividend cuts, thereby keeping the security list fresh.
Tried and True Dividend Approach
WBI has always eschewed buy-and-hold and passive asset allocation conventions that can expose investor capital to large losses in bear market cycles. The onset of the secular bear market decline in 2008 was especially troubling for investors approaching retirement whose risk tolerance and capacity to overcome loss is compromised as their objectives shift to needing current income and capital growth to support their lifestyle needs.
Schreiber said a portfolio developed with the expressed purpose of generating income must have a significant allocation to dividend-paying stocks. Bonds may have higher yields and generate more cash for each dollar invested, but their income streams are fixed and don’t keep pace with inflation. In the last 18-24 months, a popular method of dividend inclusion in portfolios has been via smart-beta ETFs, which can bridge the gap between active and passive strategies with active rebalancing.
“We believe investors should get paid while they wait for stock prices to appreciate and that they should guard their investment capital,” said Schreiber. “That capital is the engine that produces growth or income. Our goal is to offer investors the benefits of investing in dividend-paying equities by using a highly-liquid, cost-efficient ETF as part of their core holdings. I feel that we’ve created a smarter dividend-focused ETF with the launch of WBIY.”
For more information, please visit www.wbishares.com
An investment in the Fund is subject to investment risk, including the possible loss of principal amount invested. Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. High yielding stocks are often speculative, high risk investments. These companies can be paying out more than they can support and may reduce their dividends or stop paying dividends at any time, which could have a material adverse effect on the stock price of these companies and the Fund’s performance. The Fund is not actively managed and the Sub-Advisor does not attempt to take defensive positions in declining markets. Unlike many investment companies, the Fund does not utilize an investing strategy that seeks returns in excess of its Underlying Index. There is no guarantee that the Fund will achieve a high degree of correlation to the Underlying Index and therefore achieve its investment objective. Market disruptions and regulatory restrictions could have an adverse effect on the Fund’s ability to adjust its exposure to the required levels in order to track the Underlying Index. Other Fund risks include but are not limited to concentration risk, cyber security risk, small and mid-cap risk, tracking error risk, premium/discount risk, and valuation risk. Additional details regarding the risks of the Fund can be found in the prospectus.
The Fund is new with no operating history and there can be no assurance that the Fund will grow or maintain an economically viable size, in which case the Fund may be liquidated.
Smart beta strategies attempt to deliver a better risk and return trade-off than conventional market cap weighted indices by using alternative weighting schemes based on measures such as volatility or dividends.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a current prospectus with this and other information about the Fund please visit our website at www.wbishares.com or call 1-800-772-5810. Read the prospectus carefully before investing.
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