2023-08-06 06:09:59 ET
Summary
- Franklin International Core Dividend Tilt Index ETF holds about 500 dividend stocks from developed countries.
- It was reshuffled in August 2022, older data are irrelevant to the current strategy.
- The portfolio is well-diversified across countries, sectors and holdings.
- DIVI has beaten 5 of its competitors in the last 12 months.
This article series aims at evaluating ETFs (exchange-traded funds) regarding past performance and portfolio metrics. Reviews with updated data are posted when necessary.
DIVI strategy and portfolio
Franklin International Core Dividend Tilt Index ETF ( DIVI ) started operations as an open-ended investment company on 06/01/2016. However, it has changed names, tickers and strategies on 8/1/2022. Since then, it has been tracking the Morningstar Developed Markets ex-North America Dividend Enhanced Select Index. Therefore, historical data before August 2022 are irrelevant to assess the current strategy. Also, backtests using DIVI prices before the reshuffling may be misleading.
As of writing, the fund has 495 holdings, a 12-month distribution rate of 3.17% and a cheap expense ratio of 0.09%. Distributions are paid quarterly. DIVI is not a very large fund, but it looks large and liquid enough to be used as a long-term investment and a short-term trading instrument. It has $435M in assets and the average daily volume is $3.86M.
As described in the prospectus by Franklin Templeton, the underlying index " includes a security selection and weighting process that aims to deliver a higher dividend yield than the Parent Index ( … ) while limiting expected tracking error ". The index is reconstituted quarterly. The turnover rate looks quite high: about 49%. As the reshuffling happened during the most recent fiscal year, the reported rate may not be representative of the strategy.
The fund is mostly invested in large and mega-cap companies (87% of asset value). European companies have an aggregate weight of 57%, followed by Asia (28%). The heaviest countries in the portfolio are Japan (22.7%), the U.K. (12.7%) and Australia (10.3%). Hong Kong and China weigh about 3.2%, so direct exposure to geopolitical risks related to China is low. The next chart lists the countries with a weight above 1%, representing 97% of asset value in aggregate.
The heaviest sector is financials (21%), followed by healthcare (12.9%), consumer discretionary (11.8%) and industrials (11.5%). Other sectors are below 9%.
The top 10 holdings, listed below, represent 15.5% of asset value, and the top name weighs 2%. The portfolio is well-diversified and risks related to individual companies are low.
Name | Weight (%) | ISIN | Currency |
NESTLE SA REG | 2.00 | CH0038863350 | CHF |
NOVARTIS AG REG | 1.95 | CH0012005267 | CHF |
ASML HOLDING NV | 1.87 | NL0010273215 | EUR |
NOVO NORDISK A/S B | 1.68 | DK0060534915 | DKK |
LVMH MOET HENNESSY LOUIS VUITTON | 1.50 | FR0000121014 | EUR |
ROCHE HOLDING AG GENUSSCHEIN | 1.46 | CH0012032048 | CHF |
ASTRAZENECA PLC | 1.39 | GB0009895292 | GBP |
BHP GROUP LTD | 1.38 | AU000000BHP4 | AUD |
TOYOTA MOTOR CORP | 1.20 | JP3633400001 | JPY |
ALLIANZ SE REG | 1.02 | DE0008404005 | EUR |
Past performance compared to competitors
The next chart compares the 12-month total returns of DIVI and five international dividend ETFs:
- SPDR S&P International Dividend ETF ( DWX ), reviewed here ,
- WisdomTree Global ex-U.S. Quality Dividend Growth Fund ( DNL ), reviewed here ,
- First Trust Dow Jones Global Select Dividend ETF ( FGD ), reviewed here ,
- Invesco International Dividend Achievers ETF ( PID ), reviewed here ,
- iShares International Select Dividend ETF ( IDV ).
DIVI is the best performer and beats the second one by a significant margin of 3.6%. A note of caution, though: this is a short period and we can't compare them on a longer one because of the reshuffling on 8/1/2022.
Distribution history prior to August 2022 is not more relevant than price history. Any dividend growth rate calculation would be unreliable. We may hope that future distributions will be more steady than past ones, reported on the next chart.
Takeaway
Franklin International Core Dividend Tilt Index ETF holds about 500 dividend stocks from developed countries. Japan is the heaviest country in the portfolio, and Europe represents more than half of asset value. The fund is quite heavy in financials, but it is well-diversified across sectors and holdings. It has beaten 5 of its competitors in the last 12 months. Keep in mind than DIVI is a new fund in an old shell. Data prior to August 2022 must be ignored.
For further details see:
DIVI: A Promising New ETF In An Old Shell