BetaShares launches first yield-focused US equities ETP on ASX

Alex Vynokur

Alex Vynokur

BetaShares, a provider of Australian exchange traded products (ETPs), yesterday announced the launch of a new ASX-traded fund, aimed at boosting income over a portfolio of US equities.

The BetaShares S&P 500 Yield Maximiser Fund (managed fund) will trade under the ASX code UMAX and aims to provide investors with exposure to the stocks comprising the benchmark US Index, the S&P 500 Index, while providing regular income that exceeds the  dividend yield of the stocks alone. It also aims to provide lower overall volatility than the Index.

The Fund’s investment approach is to hold an investment portfolio providing exposure to the S&P 500 Index and at the same time, to sell some of the upside share price potential of the Index in return for additional income.  The Fund does not aim to track the Index.

The launch of the Fund comes after the success of BetaShares’ yield-focused Australian equities product, the BetaShares Australian Top 20 Equity Yield Maximiser Fund (managed fund) (YMAX), which employs a similar strategy and has attracted more inflows than any other equities exchange traded product on ASX in 2014.

The launch of the Fund comes at a time of increasing demand from ETP investors for international equities-focused funds, with around 40% of the ETF industry’s $12.4 billion in funds under management currently allocated to global equities products.

BetaShares Managing Director, Alex Vynokur, said the launch of UMAX would provide investors with further potential to enhance portfolio yields, as well as offering the additional diversification benefits of exposure to an overseas market.

“After such a strong response to the equity income strategy BetaShares introduced with YMAX, we believe there is great appetite for investors looking for a similar approach over US equities.

“This fund may suit not only SMSFs and investors who are seeking increased yield and reduced volatility over their share portfolio, but also those looking for exposure to the US market as a potential way to diversify out of Australian shares,” said Mr Vynokur.

The Fund will be the first Australian-domiciled ETP on the ASX to provide US-specific equity exposure, offering significant administrative benefits for Australian investors.

“Recent research conducted by Investment Trends indicated that the number one problem associated with exchange traded products that offer exposure to international equities, as identified by investors and their advisers, was the need to fill out US tax forms, known as W-8BEN forms, in order to qualify for reduced withholding tax on distributions received. UMAX has been designed to solve this problem. Because it’s an Australian domiciled fund, investors don’t have to worry about this paperwork as the forms are completed at the Fund level. They also have no need to be concerned about any potential US estate tax implications that may arise when investing in US-listed products.”

“UMAX fills a gap for investors looking for US shares exposure that comes with the potential for greater yield, lower volatility and reduced downside risk compared to an investment in the shares alone. For BetaShares, it also represents our first international equity offering and our 15th product overall,” Mr Vynokur concluded.

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