American asset manager Legg Mason has introduced its third low volatility high dividend exchange traded fund (ETF) that focuses on emerging market.
The Legg Mason Emerging Markets Low Volatility High Dividend ETF (LVHE) is composed of emerging market stocks.
The new fund will complement to the Legg Mason Low Volatility High Dividend ETF and the Legg Mason International Low Volatility High Dividend ETF.
Legg Mason said that emerging market equities can offer attractive investment opportunities due to faster economic growth and lower valuations than developed markets.
However, increasing concerns about geopolitical and macroeconomic risk and equity volatility make it important for strategies to seek to minimize downside risk. The use of currency hedging attempts to further mitigate risk, it added.
“The Holy Grail for many investors has been to have their investments generate income while still achieving principal growth with enough stability to keep panic at bay when the market is turbulent. Today’s low yielding environment makes this harder to achieve but we believe a low volatility high dividend approach in emerging market equities can be part of the solution,” said James Norman, president of QS Investors , an independently-managed affiliate of Legg Mason.
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Norman added: “These strategies are designed to benefit spenders who are looking for capital appreciation in their retirement years and savers who are in the wealth accumulation phase. When dividends are reinvested, they can lower risk and increase total annualized returns over time.”