O'Leary Goes Global

08/14/2018 5:00 am EST


Jim Woods

Editor, Successful Investing, Intelligence Report

Congratulations to Jim Woods on the launch of his newest advisory service, The Deep Woods. Here, the stock and ETF expert highlights two international funds from Kevin O'Leary's O'Shares ETF Investments.

The O’Shares FTSE Europe Quality Dividend ETF (OEUR) offers a relatively low-risk, low-volatility way to invest in out-of-favor international markets.

This is an exchange-traded fund designed to reflect the performance of publicly listed, large- and mid-capitalization, dividend-paying issuers in Europe. To be considered for inclusion in the portfolio, targeted issuers must exhibit three main attributes: high quality, low volatility and high dividend yields.

While the O’Shares FTSE Europe Quality Dividend seeks out companies with solid dividend yields, the additional emphasis on quality gives the ETF a kind of safety net.

For dividend funds, the quality factor often can mean eschewing the companies that currently pay the highest yields, since these often are less stable than those that have track records of long-term dividend payout and growth.

As such, the ETF's respectable 3.7% yield is built on solid ground, even if the payout could be higher. Additionally, due to its concentration on European countries and minimal weighting in technology (less than 1%), OEUR is well out of the way of most trade or tariff-related volatility that may occur.

The fund's top three European allocations are the United Kingdom, 28.7%; Switzerland, 18.7%; and France, 16.2%. Its top three sectors by allocation are Health Care, 19%; Consumer Goods, 18.1%; and Industrials, 15.4%.

Investors interested in receiving a monthly dividend distribution through a low-volatility international fund may want to look into the O’Shares FTSE Europe Quality Dividend ETF.

The O’Shares FTSE Asia Pacific Quality Dividend ETF (OASI) is a refined yet simple way for investors to play the dividend market in the Asia-Pacific region.

Similar to the other O’Shares dividend funds, the ETF chooses its holdings from the FTSE Developed Asia Pac Index, which is composed of roughly 800 of the largest publicly listed companies within the developed Asia-Pacific region.

O’Shares FTSE Asia Pacific Quality Dividend screens the candidates and selects those that meet certain market capitalization, liquidity, high quality, low volatility and dividend yield thresholds.

Though it is a diversified fund, its holdings are skewed towards the Asia-Pacific region’s leading economic powers, who pay the highest-quality dividends. O’Shares FTSE Asia Pacific Quality Dividend is currently 44.05% invested in Japan, 26.25% in Australia, 14.08% in Hong Kong, 8% in South Korea and 5% in Singapore.

Year to date, OASI has experienced high levels of volatility and is down 1.31%. According to Seeking Alpha, part of the reason for the downturn in the Asian markets stems from China’s trade worries, which dragged the Asian markets to nine-month lows in early July. Investors who are considering plays on the Asian markets should do their due diligence.

The fund’s one-year return is 5.46%. O’Shares FTSE Asia Pacific Quality Dividend ETF pays a distribution yield of 5.03% and charges an expense ratio of 0.48%.

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