Plenty of investors love the idea of increasing their portfolios’ dividend yield while potentially lowering equity volatility.
The VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ: CDC) is an ETF that can help meet those objectives.
CDC, which turned three years old in July, has a dividend yield of 3.25%, well above what investors find on the S&P 500 or 10-year Treasuries. The ETF follows the CEMP US Large Cap High Dividend 100 Long/Cash Volatility Weighted Index while combining “fundamental criteria and volatility weighting in an effort to outperform traditional cap-weighted indexing strategies,” according to VictoryShares.
CDC’s underlying is not a run-of-the-mill equity benchmark. It features the ability to reduce equity exposure when stocks decline in dramatic fashion.
“The Long/Cash Index tactically reduces its exposure to the equity markets during periods of significant market declines and reinvests when market prices have further declined or rebounded,” according to VictoryShares.
The VictoryShares volatility weighted approach differs from competing methodologies that invest in low volatility companies. Instead, the indexes use volatility as a weighting mechanism to seek to achieve broad-market diversification. Over the past three years, Victory Capital has extended the approach beyond the US broad market to provide investors with volatility weighted solutions that seek to provide exposure to high dividends as well as international and emerging markets.