Isolated dividend growth: a pathway to low correlation and low volatility?
In the pursuit of diversification and risk management, investors have historically looked for assets classes that are uncorrelated to the traditional securities of stocks and bonds, such as commodities, real estate products and currencies. This is especially true today as many investors have concern that interest rates may rise, which could impact the results from many fixed income investment categories. Now, there is a new diversification option. Investors can take advantage of a recently developed nontraditional asset class addition to the investment universe: isolated dividend growth. The Reality Shares DIVS ETF (ticker: DIVY) is an example of such a fund offering access to isolated dividend growth. Although dividends have been a staple strategy among equity investors, only recently has the isolated dividend growth rate emerged as a separate and distinct asset class with distinct diversification advantages.
The Reality Shares DIVS ETF offers investors a new way to approach dividend investing by isolating and accessing the dividend growth rate. By separating dividend growth from stock price, the Fund provides the potential to participate in a portion of the dividend growth rate of large-cap U.S. companies, without exposure to the volatility of their underlying stock prices. At Reality Shares, we believe DIVY may be a fixed income strategy alternative because it offers low volatility and low correlation to traditional fixed income and equity strategies.
DIVY reached some major milestones just this past year – it recently celebrated accumulating over $50 million in assets and the Fund was also recognized by Fund Action at the ETF Innovation Awards as “Alternative ETF of the Year”. Eric Ervin, Co-Founder, President and CEO of Reality Shares, commented on the awards saying, “We are very glad DIVY is receiving recognition for its groundbreaking strategy. We believe DIVY is one of the most unique ETFs on the market.”