Some investors believe that a security’s price tag is not the
primary indicator of intrinsic value. For example, there were
some investors and pundits that argued Apple (NASDAQ:
) was inexpensive on a valuation basis when the shares traded
above $700. Likewise, it is possible for a stock trading at $25
to be considered expensive relative to its peer group.
The takeaway is that price tags can be superficial, but many
investors still find themselves attracted to stocks or
that look cheap on the outside. If the total number of
U.S.-listed exchange traded products, ETFs and ETNs, is rounded
up to 1,500, then currently about 11 percent of the universe
trades below $20.
That is fair amount and an amount large enough to mean some
sub-$20 should be ignored while plenty of others are worth
embracing. Here are few that fall into the positive, latter
Global X FTSE ASEAN 40 ETF (NYSE:
) In what has been a rough year for many of the more popular
diversified emerging markets ETFs, the Global X FTSE ASEAN 40 ETF
has gained 6.4 percent due to its focus on top-performing
Southeast Asian markets. While ASEA is an interesting ETF trading
below $18.50, investors should do a few minutes of homework
before jumping in.
The ETF is framed as a play on the ASEAN group of nations, but
the fund only offers exposure to five ASEAN members or just half
the group’s membership. Additionally, ASEA’s weight to the
Philippines is slight at 0.7 percent. As was noted last month,
ASEA’s 38.6 percent
allocation to Singapore
has been holding the fund back this year.
That puts somewhat of a burden on Malaysia, Indonesia and
Thailand to pick up the slack. Indonesia and Thailand have
answered the call, though it might be advisable to wait on ASEA
until after global markets digest the result of Malaysia’s
upcoming elections. Still, ASEA has $20 this year if Indonesian
and Thai equities continue on their current trajectories.
PowerShares High Yield Equity Dividend Achievers Portfolio
) The PowerShares High Yield Equity Dividend Achievers Portfolio
could be attractive to investors on three fronts. First, the ETF
trades below $11. Second, PEY has a 30-day SEC yield of 4.05
percent. Third, the ETF pays a monthly dividend, providing for a
steadier income stream than ETFs and stocks that deliver payouts
on a quarterly basis.
PEY tracks the NASDAQ Dividend Achievers 50 Index, which has
outpaced the Dow Jones U.S. Select Dividend Index, the SP
500 Value Index and the SP 500 this year,
according to PowerShares data
The catch with PEY is that the ETF is not diverse at the
sector level with utilities, financials and consumer staples
combing for 75 percent of the fund’s weight. On the other hand,
PEY does a good job of mixing large-, mid- and small-caps
together. Top-10 holdings include Altria (NYSE:
), ATT (NYSE:
) and Lockheed Martin (NYSE:
). PEY has $321.5 million in assets and charges 0.6 percent per
year in fees.
First Trust Value Line Dividend Index Fund (NYSE:
) The First Trust Value Line Dividend Index Fund offers investors
another low price tag dividend option, but FVD’s time below $20
may be short as it is just pennies below that area as of this
writing. FVD uses a different weighting scheme than many of the
larger dividend ETFs on the market today. The Value Line Dividend
Index starts with stocks that earn a Value Line safety rating of
one or two.
From there, Value Line selects those companies with a higher
than average dividend yield, as compared to the indicated
dividend yield of the Standard Poor’s 500 Composite Stock
according to First Trust
. Sub-$1 billion market cap firms are also eliminated.
The Value Dividend Index has also outpaced the Dow Jones
Dividend Select Index and the SP 500 this year. Conservative
investors will enjoy knowing FVD’s underlying index has a
three-year standard deviation that is 320 basis below that of the
SP 500 and a beta of 0.75 against the benchmark U.S. index,
according to First Trust data.
FVD, a quarterly dividend payer, has $628.6 million in AUM and
annual expense ratio of 0.7 percent.
For more on ETFs, click
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