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Index IDEA: Canadian FAs seek global yield at a low cost through index-based investments

A FTSE Russell survey published earlier this year shows Canadian financial advisors are increasingly looking to low-cost global ETFs as a means of increasing yield or generating income. And new data from the global index provider shows the historic yields of companies outside of North America.

Among 81 Canadian financial advisors surveyed on how they use smart beta index-based investment products, “increasing yield or generating income” was the second highest reason for use behind “improving diversification.” In addition, when this same group was asked their reasons for selecting a smart beta ETF product to use, the top three reasons cited were performance, transparency and cost.

Source: FTSE Russell – Smart beta 2018 survey findings from US, Canadian and UK financial advisors

When FTSE Russell compared relative dividend yields over the last five years for the FTSE Developed ex North America High Dividend Yield Index (comprised of stocks from the FTSE Developed ex North America Index characterized by higher-than-average dividend yields), it found the dividend-oriented index demonstrated consistently higher dividend yields over time than its parent index.

 

Rolf Agather – managing director, North America index research, FTSE Russell:

“Our survey shows Canadian financial advisors increasingly looking to index-based investment approaches to address a wide range of investment objectives. Generating income or yield from sources outside of North America is definitely one of those instances where an index-based ETF may help achieve the objective in an efficient way.”

Tim Huver – head of product, Vanguard Investments Canada, Inc.:

“We have seen that Canadian investors value equity income options that are low-cost, global and well-diversified. And historical performance shows that exposure to high dividend-paying companies across a diversified mix of developed international markets outside of North America in an index-based ETF can help provide the income-oriented solutions Canadian investors and advisors are seeking.”

Get more information on global indexes from FTSE Russell.

 

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