SSgA launches high yield ETF

State Street Global Advisors (SSgA) has launched a new SPDR exchange traded fund (ETF) for the Australian market focusing on stocks paying high and sustainable dividends.

The SPDR MSCI Australia Select High Dividend Yield ETF is aimed at both retail and institutional investors, and has a fee of 35 basis points

The fund tracks a basket of shares derived from a custom MSCI index, and aims to target shares that have a higher than average dividend yield with the potential to participate in capital growth, according to SSgA.

Rob Goodlad, SSgA senior managing director in Australia, said the fund would suit investors nearing retirement or those looking for a high and reliable income stream, and also expected advisers to respond positively to the product.

“As people increasingly look for more passive investment alternatives, the appeal of ETFs is that they are low-cost, transparent (through their ASX listing) and liquid,” he said.

“Surprisingly high yields can be generated from select blue chip equities in Australia, especially when one includes the value of franking credits to Australian investors. However these yields need to be sustainable and this is something the methodology behind the new MSCI Index takes into account,” Goodlad said.

MSCI executive director in Australia, Michael Anderson, said, “We are delighted that SSgA has chosen to license this innovative new MSCI index to serve as the basis of an ETF targeted at Australian investors.”

The fund will feature quarterly distribution, targeted and controlled turnover and therefore generally lower realised capital gains, according to SSgA.