Madison Investments, a Wisconsin-based asset manager overseeing $23 billion in assets, has made its ETF debut with the launch of an actively managed equities fund focused on quality income.
The ETF targets high-quality companies with a consistent record of paying dividends.
The Madison Dividend Value ETF (DIVL US) has been listed on NYSE Arca with an expense ratio of 0.65%.
The fund is led by portfolio managers John Brown and Drew Justman who collectively have 63 years of investment industry experience.
The strategy targets current income while providing an opportunity for capital appreciation by investing in 30 to 60 stocks selected from a universe of US-listed equities with market capitalizations over $1bn. Up to 50% of the portfolio may be allocated to American Depository Receipts.
Madison’s investment process involves screening for companies that have strong balance sheets, durable competitive advantages, a history of paying dividends, and a current dividend yield that is at least 110% of the average yield of the S&P 500.
Utilizing a “relative yield valuation discipline”, the strategy favours stocks with relative dividend yields (compared to the S&P 500’s average) that fall within the top 25% of their historic range, an approach that Madison states can capture both above-market yields as well as growth potential. At least 50% of the securities in the portfolio must be from companies with credit ratings of A- or above, a move that aims to limit exposure to high-yielding firms that may not be able to sustain their dividends.
To promote diversification, Madison will ensure that no more than 20% of the ETF’s assets will be allocated to companies from the same economic sector.
According to Madison, the firm plans to further expand its ETF suite in the coming weeks with the launch of several actively managed income-focused funds including the Madison Covered Call ETF (CVRD US), Madison Aggregate Bond ETF (MAGG US), and Madison Short Term Strategic Income ETF (MSTI US).
Steven Carl, Chair of the Executive Committee and Chief Distribution Officer at Madison Investments, commented: “As an employee- and founder-owned firm, Madison Investments has always put the long-term interests of our clients first. This means continually identifying and developing innovative solutions to help advisors and their clients pursue their financial goals. We firmly believe these active ETFs will carry forward our legacy of risk-conscious, institutional-caliber investment strategies.”
Patrick Ryan, President of Madison’s Funds and ETFs, added: “This launch is a natural extension of our existing suite of investment strategies guided by our ‘Participate and Protect’ philosophy. Our organization recognizes the importance of actively balancing return potential with risk management. By capturing the value of active management within the ETF product wrapper, we’re providing investors with additional tools to participate in equity and fixed income markets with a proactive approach to risk.”