Russell Australia High Dividend ETF records strong first six months

• Russell wins award for best new ETF in Asia
• RDV awarded multiple rating agency approvals

The Russell Australia High Dividend Shares ETF (RDV) has grown rapidly to $70 million since launch almost six months ago. It is now accessible via the major platforms , has received positive ratings and been awarded best new ETF in Asia.

RDV is Russell’s first ever ETF and is linked to a newly-developed index, the Russell Australia High Dividend Index. The index seeks to deliver a dividend stream 1% higher than the broader market from a portfolio of around 50 Australian blue chip shares. Russell’s index has a bias towards those companies that have a high but sustainable expected dividend yield that demonstrate a history of paying dividends; dividend growth and consistent earnings. The index has a broad sector exposure ensuring that it maintain a ‘market like’ exposure while still delivering higher dividends.

Since launching in May this year, RDV has grown rapidly and is now at $70 million. September alone saw the number of investors increase by over 130%. With an increase in AUM and number of investors, RDV’s average daily volume is almost $500,000. It has returned 4.76% since launch net of fees.

Russell is also hitting its target market of SMSFs, with almost 50% of RDV’s secondary assets held by SMSFs directly.

“RDV was designed around the specific needs of local investors, who want a bias towards those companies that have a high expected dividend yield but also meet provide strong capital growth opportunities,” said Amanda Skelly, director of ETF product development at Russell Investments.

“RDV has struck a chord with investors, in particular SMSFs who are discovering the benefits of an ETF designed for this market: access to a diversified portfolio of Australian shares, the ability to see portfolio holdings daily and to trade shares directly; as well as low costs and tax benefits,” Ms Skelly added.

RDV is also making inroads with advisers. Investments via platforms now make up almost a quarter of the ETF’s secondary assets. RDV is also available through a number of platforms, most notably BT SuperWrap with no investment limitations, and through margin lenders.

Ratings and awards across Asia

Since launch, RDV has continued to impress ratings agencies. Research house Zenith recently launched its ETF research business by awarding RDV a ‘recommended’ rating. RDV was also awarded a ‘Recommended’ rating by research firm Lonsec.

RDV was also recently selected as best new ETF in Asia by Republic Partners.

“Russell Investments has hit the nail on the head launching its ETF range with this product because it demonstrates an understanding of what investors want and the disenchantment with most managed funds in this sector. With the migration of the financial advice industry from a commission-based to a fee-for-service model the Russell ETF is an intelligent and well-conceived product to cater to these new market conditions,” said Andrew Crawford, director of Republic Partners.

More ETFs to come in the next 18 months

Russell has been conducting research into new ETFs, in particular institutional ETF usage with a view to launching products for this market. In Russell’s view, ETFs allow institutions to tilt their portfolios to target exposure to a particular part of the market for cash equitisation and have benefits over futures because they reduce the impact on distributable income.

“We have a solid foundation to build further innovative products that meet investor needs. We are working to build our next suite of ETFs, including products for institutions, and aim to launch 8-10 new ETFs within the next 18 months,” Ms Skelly concluded.