United States Commodity Funds (USCF) has launched a new actively managed equity ETF targeting dividend-paying companies.
The ETF invests in dividend-paying companies that satisfy Miller/Howard’s ESG criteria.
The USCF Dividend Income Fund (UDI US) has been listed on NYSE Arca with an expense ratio of 0.65%.
The fund is sub-advised by Miller/Howard Investments, a boutique investment manager with $2.8bn in assets under management.
The ETF invests in US-listed equities including American Depository Receipts of dividend-paying companies that meet modest environmental, social, and governance (ESG) criteria.
Up to 25% of the portfolio’s assets may be invested in real estate investment trusts (REITs).
The fund seeks out mature companies – eligible constituents must have market capitalizations above $4 billion and average daily trading volumes greater than $30 million – which have historically generated attractive returns and are considered likely to continue growing their dividends.
Miller/Howard utilizes a bottom-up fundamental research process to select companies based on dividend yield, prospects for dividend growth, balance sheet strength, dividend coverage, and valuation.
Firms involved in coal extraction, alcohol, tobacco, or firearms will not be eligible for inclusion, while companies will also be assessed against additional ESG criteria including governance and ethical practices, environmental and human rights records, and diversity.
The ETF will typically consist of 30 to 45 companies representing Miller/Howard’s highest conviction ideas.
According to USCF, the fund offers the potential for ‘unfixed income’ by participating in a growing stream of dividends that can act as a hedge against inflation. The firm notes that compounding income can be a significant driver of long-term returns and wealth creation.
The fund is the second income-focused ETF created through a partnership between USCF and Miller/Howard following the March 2021 launch of the USCF Midstream Energy Income Fund (UMI US) which targets high-yielding companies operating in the midstream energy infrastructure segment.