ETF Russell launches Australia’s first high dividend ETF

Simon Hampel · 18th May, 2010

Russell Investments - Press > Press Releases > May 2010 > 4 Etf Launch >

RDV provides tax edge for Australian investors. Russell expects demand for ETFs to surge due to financial advice reform.

SYDNEY, MAY 4, 2010: In a global first for the company, Russell Investments has today launched the next generation Exchange Traded Fund (ETF) in the Australian market - the Russell High Dividend Australian Shares ETF (RDV).

RDV provides investors with an easier way to access a diversified blue chip Australian shares portfolio that aims to deliver higher dividends. Based on a new index purposefully built by Russell and skewed to companies that are expected to pay above average dividends, RDV is well diversified and aims to deliver a higher dividend yield than the market.

In Australia for the launch of Russell’s first ETF, newly appointed managing director of Russell’s global ETF business James Polisson said the company was uniquely positioned to deliver a purpose-built solution.

"No other ETF provider has the index and portfolio construction expertise coupled with the implementation credentials in the Australian market today," he said.

The underlying new Russell Australia High Dividend Index is comprised of blue chip companies with a bias towards those companies that have a high expected dividend yield (taking into account franking credits) and which meet other characteristics, including: a history of paying dividends; dividend growth; and consistent earnings.

Amanda Skelly, Russell’s director of product development, ETFs, Australia said RDV has been tailor-made to specifically meet the needs of Australian investors with an eye to Self Managed Superannuation Funds (SMSF).

"Our research shows SMSF investors are looking for high income, franking credits, capital growth and diversification. We saw an opportunity to create an ETF that provides investors with a simple, low-cost way of accessing a diversified blue-chip Australian shares portfolio that meets these investment priorities in a tax-effective structure," she said.

"RDV also provides a potential tax edge for Australian investors," said Ms Skelly. "For investors targeting after-tax investment outcomes, RDV aims to deliver higher dividends and franking credits as well as the power of tax deferral and the power of CGT discounting."

Russell’s global indexing expertise is key

Leveraging Russell’s extensive global indexing credentials has been key to delivering this solution.

Russell indexes currently cover 98 per cent of investable securities worldwide. Since the launch of its first index in 1984, Russell Indexes are now one of the world’s leading equity index families with over $3.9 trillion in global assets benchmarked and the 4th largest index provider for ETFs globally.

Based in the US and formerly with BGI’s iShares business, Mr Polisson said Russell’s next generation product was a pointer to an evolving trend of product innovation that is well-advanced in international markets.

"Since the launch of ETFs in the US in the early 1990s, the products have expanded to cover all asset classes, most geographical markets as well as offering style-based strategies such as value and growth. We expect Australia will similarly evolve and we’re committed to Russell leading that innovation," he said.

Mr Polisson also said the trend to fee-for-service advice in the US contributed to the surge in demand for ETFs. "Given the Australian Government recently announced the intention to ban all commissions on investment products from 1 July 2012, we would expect demand for low cost, non-commission paying products like ETFs would continue to escalate in this market," he said.

More information on the Russell High Dividend Australian Shares ETF (RDV) and the Russell Australia High Dividend Index can be found here: www.russell.com.au/etfs
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Johny_come_lately · 8th Jun, 2010

What I want know is, how this new russell ETF is better than a ASX200 ETF? I know the russell invests in 50 companies. Because the Aussie market is small, wouldn't this new ETF be mainly banks and miners?

Johny.

jabba_jones · 8th Jun, 2010

Better depends on what you're looking for in a investment. so not better per say, different.

The underlying new Russell Australia High Dividend Index is comprised of blue chip companies with a bias towards those companies that have a high expected dividend yield (taking into account franking credits) and which meet other characteristics, including: a history of paying dividends; dividend growth; and consistent earnings.
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So instead of buying stocks based on market cap as an ASX200 ETF probably would, it uses the above criteria to weight. Stocks would more likely be finance coys & banks, Miners don't generally give decent dividends.

RDV aims to deliver higher dividends and franking credits as well as the power of tax deferral and the power of CGT discounting
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Not sure how paying high dividends and tax deferral work hand in hand. I'd much rather the share price go up and a minor dividend paid, but thats just me.

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ETF Russell launches Australia’s first high dividend ETF

Simon Hampel Founder Staff Member

Johny_come_lately Well-Known Member

jabba_jones Active Member

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ETF Russell launches Australia’s first high dividend ETF

Simon Hampel Founder Staff Member

Johny_come_lately Well-Known Member

jabba_jones Active Member

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