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ABCs of Guggenheim's New Fund

NEW YORK (TheStreet) -- The new Guggenheim ABC High Dividend ETF (ABCS) plays into an ETF segment that could be crucial in helping U.S.-based investors in enjoying stock market success over the course of the next 10 years. The fund accesses high-yielding stocks from Australia, Brazil and Canada -- the "ABC" in the name of the fund.

The uniting theme to the country selection is that they are commodity-based countries and obviously, these countries, along with other commodity-based countries like Chile and Peru, have become very popular and rewarding investment destinations. Also, the trends that have led to success for these markets appear to still be in place.

The fund is not a simple repackaging of mega-cap stocks from each country that are ubiquitous in so many funds; names like Vale (VALE) or BHP Billiton (BHP). The fund will have 30 holdings with 46% of the fund in Brazil, 29% in Australia and the rest in Canada. With only 30 holdings, some of the names have fairly large weightings. The largest holding is beer and soft drink maker Ambev (ABV) from Brazil at 9.1%, followed by Australian telecom provider Telstra (TLSYY) at 8.4%, followed by several other Brazilian companies with weightings greater than 4%.

As this is a dividend-centric fund, it will not be a surprise that utilities is the largest sector at 20%, followed by telecom at 17%, and industrials and discretionary each at 12%. The fund will have a 0.65% expense ratio and currently, there is no yield information available as the fund is brand new, but investors should expect the payouts to be lumpy as some of the stocks in the fund will only pay one annual dividend as opposed to the quarterly dividend that U.S. investors are accustomed to.

As mentioned above, the fund could play a crucial role for US investors preferring to build foreign exposure using broad-based funds similar to the iShares MSCI EAFE Index Fund (EFA). Unfortunately, EFA is dominated by countries that are fundamentally most similar to the U.S., and with many similar problems as the U.S. The UK, Japan, France and Germany account for 58% of the fund making it very unappealing.

Stock quotes in this article: BHP, ABV, EFA, GXF 

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