Three ETFs that outperformed BTP Valore, but only for investors willing to step outside the safety perimeter. Safety or yield? The trade-off is narrower than it appears.
There are two global dividend ETFs, both tracking the same index, that can help illustrate the mechanics of this segment and what differentiates one product from another.
The first ETF is the iShares STOXX Global Select Dividend 100 UCITS ETF (DE), ticker ISPA. Its benchmark is the STOXX Global Select Dividend 100 Index, which comprises 100 high-dividend-yield companies from developed markets across North America, Europe, and Asia-Pacific. The index methodology focuses on issuers with a demonstrated, sustainable dividend policy rather than opportunistic or irregular payouts.
The TER, or total expense ratio, stands at 0.46%. This is broadly in line with peers in the global dividend segment, which typically involve more stringent screening criteria than broad-market exposures.
The fund employs physical replication (full replication), meaning the ETF directly holds the securities included in the benchmark. For less experienced investors, this provides a straightforward structure: what the investor sees in the index is effectively held in the portfolio.
The fund distributes income up to four times per year and currently shows a trailing 12-month dividend yield of roughly 4.7%. It is essential to stress that this metric is backward-looking: it reflects dividends paid over the past year relative to the current NAV and does not represent a forward yield or distribution commitment.
This ETF fits squarely within the global high-dividend equity category, oriented toward income generation. However, one feature stands out: its broad geographical and sector diversification, which extends well beyond the typical U.S. or Europe-centric dividend products. The top holdings include names from Australia, Hong Kong, Europe, and the U.K. (such as Fortescue, Xinyi Glass, and Yancoal Australia), underscoring its distinctly global allocation footprint.
The second product is the Xtrackers Stoxx Global Select Dividend 100 Swap UCITS ETF (XGSD), which tracks the same benchmark.
The primary distinction lies in its replication approach: the ETF uses synthetic replication, gaining index exposure via a swap agreement rather than physically holding the underlying securities. While this may appear complex, synthetic replication is common in markets where physical access to constituents is costly or operationally inefficient.
The TER is 0.50%, marginally higher but still well within the standard range for the category. Like the iShares version, the ETF distributes income and is aligned with an income-focused strategy. One potential advantage of synthetic structures is enhanced tracking precision, particularly when the underlying basket contains less liquid or harder-to-access equities.
A few additional considerations
Both ETFs operate within the dividend-income space, but not within the “traditional” U.S. dividend aristocrat style universe. For ISPA, the most represented sectors include financials, energy, utilities, and basic materials—industries generally characterised by robust free cash flow generation and comparatively high payout ratios.
From a geographical standpoint, the U.S. weight is significantly lower than many investors might assume (around 16.5%), while Hong Kong, Australia, and the U.K. account for a meaningful share. This may appeal to investors seeking to diversify away from the “U.S.-heavy” concentration inherent in many global portfolios.
The fund’s largest positions—Fortescue, Xinyi Glass, Yancoal, Aker BP—reflect exposure to cyclical and commodity-linked businesses known for elevated yield profiles. Consequently, the ETF’s performance tends to be more sensitive to the global economic and commodity cycle, which can translate into heightened volatility during downturns.
The Xtrackers version mirrors this exposure due to the shared benchmark, but its synthetic structure introduces an additional element: counterparty exposure. In the event the swap provider encounters financial distress, index replication could be impacted. Although mitigated by collateralisation frameworks and stringent regulations, this remains a theoretical risk inherent to all synthetic ETFs.
Practical Examples
Consider an ETF as a pre-assembled fruit basket: it provides diversified exposure to multiple components through a single purchase, and dividend ETFs in particular include companies characterised by a consistent history of distributions.
To clarify replication mechanics, physical replication corresponds to holding the actual securities in the portfolio, similar to having the real fruit inside the basket, whereas synthetic replication delivers the same economic exposure through a contractual agreement with a counterparty, meaning the ETF does not own the securities directly but receives their performance through the swap structure.
Another essential concept is the dividend yield, which is often misinterpreted as an indicator of future returns; in reality, it merely reports the dividends paid over the previous 12 months relative to price and should not be considered a forward-looking metric.
Main Risks
High-dividend equity strategies tend to underperform during periods of rising interest rates, as fixed income becomes relatively more attractive. Investors may shift preference toward bonds when yields converge, reducing demand for equity-income products.
Additionally, in phases of economic contraction or risk-off sentiment, the sectors most represented in these ETFs—energy, materials, and financials—can exhibit elevated volatility due to their cyclical nature. High-dividend stocks are not inherently defensive and may even amplify market drawdowns.
For the Xtrackers ETF, synthetic replication introduces counterparty risk associated with the swap provider. While typically well-managed through collateralisation and regulatory safeguards, it must still be acknowledged when evaluating synthetic structures.
|DISCLAIMER The information and considerations contained in this article should not be relied upon as the sole or primary basis for making investment decisions. The reader retains full freedom in their investment decisions and full responsibility for making them, as they alone know their risk appetite and investment horizon. The information contained in this article is provided for informational purposes only, and its disclosure does not constitute and should not be considered an offer or solicitation to the public. Original article published on Money.it Italy 2025-12-03 20:29:00. Original title: 2 ETF a dividendi superiori al 3% da conoscere
