Amplify ETFs has launched a global ex-US version of its increasingly popular US equity income strategy – the $1.8 billion Amplify CWP Enhanced Dividend Income ETF (DIVO US).
Christian Magoon, CEO of Amplify ETFs.
The Amplify International Enhanced Dividend Income ETF (IDVO US) has been listed on NYSE Arca with an expense ratio of 0.65%, ten basis points higher than the fee charged by DIVO.
Amplify will be hoping that IDVO mirrors the recent success of DIVO which has raked in over $1.0bn in net new assets since March as investors have pivoted towards higher income, quality propositions in the face of growing equity market uncertainty.
Investment approach
Similar to DIVO, IDVO is sub-advised by Florida-based investment advisor Capital Wealth Planning.
The ETF invests in 30-50 American Depository Receipts of companies with favourable attributes related to earnings, cash flow, return on equity, market capitalization, and management track record.
Additionally, the fund utilizes an opportunistic covered call-writing program in a bid to lower overall risk and enhance total return.
A covered call is an income-producing strategy where an investor sells call options against shares of stock already owned. The investor collects the option premium as income but is exposed to losses on the contract if the underlying stock’s price rises above the call option’s strike price. As such the investor will not realize gains on the stock position above the strike price.
IDVO targets an annual income rate between 5% – 8% through a combination of dividends (3% – 4%) and option call premiums (2% – 4%).
Christian Magoon, CEO of Amplify ETFs, said: “IDVO will utilize a strategy that seeks to produce investment income from both dividends and tactical covered calls written selectively on its portfolio of high-quality international stocks. We believe this approach will satisfy international stock investors who are seeking attractive monthly income but are also focused on higher-quality holdings. IDVO is a compelling geographical extension of our growing income ETF line-up at Amplify.”
Kevin Simpson, Founder and CIO, Capital Wealth Planning, said: “We are excited to expand our relationship with Amplify ETFs in offering IDVO, the international counterpart to DIVO. We are seeing additional opportunities abroad that income investors can now access through IDVO which focuses on high-quality international companies that have a history of growing earnings and dividends combined with our proprietary covered call strategy.”