The Asia Pacific region, home to a third of the world’s population, is one of the fastest growing regions on Earth. ADIV seeks to harness that growth and turn it into an opportunity for income creation.
ADIV focuses on high-quality dividend growth, as opposed to high yield.
Over the last two decades, Asian economies have both diversified and matured, leading to a plethora of high-quality income opportunities.
ADIV provides access to the best dividend investment ideas in the Asia Pacific region in a single transaction. ADIV generally holds 35 approximately equally weighted positions.
The SmartETFs Asia Pacific Dividend Builder ETF is designed to provide investors with exposure to high quality dividend growers in one of the world’s fastest growing regions, the Asia Pacific region.
The Fund aims to provide investors with exposure to Asian equities through a high conviction, low turnover portfolio of consistently profitable dividend-paying companies.
Focus on consistent high return on capital
We believe consistent high return on capital is a good indication of a company’s durability, and its ability to pay healthy dividends. The Fund invests in companies that are unusually consistent in generating returns on capital above their cost of capital.
Growth and income
Our approach to dividend investing is to focus on companies that can sustainably grow their dividend into the future, rather than simply looking for companies with a high dividend yield.
The Fund typically invests in 35 companies, with each company having an equal weighting. This helps provide a good balance between the benefits of diversification while also allowing each company to add meaningfully to performance. We don’t have a long tail of small positions and by definition we can never just ‘hug’ the benchmark index.
We focus on ‘bottom-up’ stock selection rather than trying to make decisions based on an expected outlook for the region’s economy. We like to invest in good companies that have, in the short term, fallen out of favor, but that have previously shown an ability to weather most economic environments over time.
We prefer to invest over the long term. We also recognize the increased costs of trading in and out of companies unnecessarily. Typically we will hold a company in the portfolio for between three and five years.
Repeatable and independent
Edmund Harriss and analyst Mark Hammonds have managed the Fund since launch. They have developed an investment process that is clear, robust, transparent, and scalable. Their approach filters out much of the noise and hype that surrounds companies to focus on the true signals that drive company valuations. By performing their own company research and analysis, using their own proprietary modeling systems, the managers try to avoid some of the behavioral biases associated with being unduly influenced by market sentiment.
The Fund is designed to give investors exposure to one of the world’s fastest growing regions, which will have a significant influence over our economic future. However, with change and opportunity comes risk. We seek to manage this by investing in companies that:
- have a proven record of generating returns in excess of the cost of capital;
- can successfully reinvest those returns in order to grow their business; and,
- are committed to paying dividends to shareholders that can grow over time.
The SmartETFs Asia Pacific Dividend Builder ETF’s investment objective is to provide investors with dividend income and long-term capital growth.