Sage Quant Plans Dividend Low-Vol ETF
August 13, 2012
Sage Quant Management, a Connecticut-based firm that first sought to gain permission to market ETFs in May, has filed paperwork with U.S. regulators detailing its first ETF, a dividend-focused low-volatility fund.
The Sage Low Volatility Dividend Fund will invest in some 150 dividend-paying large- and mid-capitalization stocks that show low expected future volatility as measured through a proprietary methodology that takes into account the price of the security, interest rate levels and option prices.
The company did not disclose what index the passively managed ETF will replicate, nor the fund’s planned fees and ticker.
Still, while details of the fund remain somewhat unclear, blending dividends and low volatility has already proven to be a winning combination with investors who are looking for income at a time of volatile, uncertain market action.
Some of last year’s most successful ETF launches were in fact funds that blended these themes, such as the PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) and the iShares High Dividend Equity Index Fund (NYSEArca: HDV).
Both SPLV, which tracks the S&P 500 Low Volatility Index, and HDV, which tracks the Morningstar Dividend Yield Focus Index, have seen their total returns outpace the S&P 500 Index in the past year.
SPLV, which carries a heavy focus on consumer staples and utilities, has attracted a solid $2.39 billion in assets since it came to market in May 2011, while health-care- and consumer-goods-heavy HDV boasts $2.02 billion gathered in 1 ½ years.
Sage Quant noted in the filing that its ETF may rely on derivatives such as futures and options contracts to “facilitate trading or to reduce transaction costs,” the company said in the filing.