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The Lyxor ETFs on this website are undertakings for collective investment in transferable securities (UCITS) (i) domiciled in France and approved by the Autorité des Marchés Financiers (AMF) or, (ii) domiciled in Luxembourg, approved by the Commission de Surveillance du Secteur Financier (CSSF) and authorised to market their units or shares in the French Republic in accordance with the notification procedure under Article 93 of Directive 2009/65/EC. Investors should note that the prospectuses of certain Lyxor ETFs under Luxembourg law that have been notified in accordance with this procedure are only available on the website in English. A French translation of these prospectuses can be obtained upon request by sending a letter to Lyxor International Asset Management (“Lyxor”) – 17 Cours Valmy, 92987 Paris La Défense, France.


The information on this website is not intended for persons or entities that are resident, located or registered in jurisdictions that are not authorised to distribute Lyxor ETFs. As a result, the information on this website does not constitute an offer or solicitation to buy or sell units or shares in these ETFs by anyone in any jurisdiction:


(a)   in which such an offer or solicitation is unauthorised;

(b)   in which Lyxor is not qualified to make such an offer or solicitation; or 

(c)   in which it is unlawful to make such an offer or solicitation.


In particular, the Lyxor ETFs on this website are not and will not be registered under the United States Securities Act of 1933, as amended. As such, they may not be offered or sold within the United States of America, except in specific cases where transactions are exempt from registration under the Securities Act. The ETFs listed on this website may not be sold to US citizens or transferred to the United States by any other means, unless this transaction is not subject to any specific registration under US law. 


Any person from a jurisdiction to which the above-mentioned restrictions apply should inform themselves of and observe these restrictions.


This website is intended for commercial purposes and is not regulatory in nature. Although the information provided has been drawn up on the basis of sources considered to be reliable, there is no guarantee that it is accurate, complete or relevant. Some of the information on this website is provided on the basis of market data collected at a specific time and may therefore vary over time. Lyxor advises investors to read the risk factors section of the prospectus and the key investor information document carefully. These documents can be found on the website.


The net asset value (“NAV”) of Lyxor ETFs may at any time be subject to considerable price fluctuations, which in some cases may lead to the loss of all of the capital invested. Investors should note that some ETFs may be sensitive to fluctuations in the exchange rate between their reference currency and that of the underlying index, as well as of the components of the underlying index.


Before investing in a Lyxor ETF, you should carry out your own risk analysis of the product from a legal, tax and accounting perspective, rather than basing your decision solely on the information provided. If necessary, you should consult your own advisers or any other qualified professional. 


Subject to compliance with the legal obligations by which they are bound, Lyxor or any entity within the same group shall not be held liable for any financial or other consequences of an investment in the product. 



By clicking on institutional or individual above, I confirm that I have read and understood the information provided herein, and that I am resident or registered in Luxembourg.


25 Sep 2017

Income insights: How to avoid the yield trap


Yield hunters need to consider their chosen destinations carefully. On the face of it, dividend payouts look robust, but not everything is as it seems.


Income is expensive

The growth in global dividend payouts we’ve seen in recent years may look impressive, but peak dividend payouts and peak share prices are a problem. Overpaying for income is commonplace. Inevitably, dividend cuts are a real risk. After all, a high yield isn’t always a good yield – and can involve an element of corporate distress – so how can you avoid the yield trap?


Global dividend cuts, increases and non-payers

Source: SG Cross Asset Research/Equity Quant, MSCI, Factset

Constructing our dividend indices

Our quality income strategies focus on less fashionable, more mature companies that can pay – and can keep paying – a high dividend. They still represent solid, low-risk investments. Each will have been rigorously tested for the quality of its business, the strength of its balance sheet and the dividend yield it promises.


A stock needs to pay a 4% dividend for us to invest, and if this drops below 3.5% we sell it. The only exception is for our Japanese index (more of which later), which has a starting yield of around 2.5%.

Right now, it’s difficult to pick up consumer staples businesses with a high enough yield. So our global portfolio is currently weighted towards utilities, telecoms and energy. The portfolio ebbs and flows with the markets – as stocks get more expensive, we naturally move towards more defensive, less popular areas.


A selective approach

In our global portfolio, we tend to have significant, enduring exposures to countries like Canada and Australia, which have tax-friendly, well-established dividend regimes. We also favour countries where the right kinds of businesses have a firm foothold, such as the UK (pharmaceuticals) and Switzerland (consumer goods producers).

In the US, the S&P 500’s yield habitually hovers around 2%, so finding a higher yield means narrowing your search. There are plenty of high quality businesses, but their tendency to substitute dividend payments with share buybacks means we cannot identify enough good companies with high enough dividend yields to justify a higher weighting in our global portfolio. Other strategies might have more leeway. For us, Europe and Asia are better hunting grounds. 


The attraction of Europe

Continental Europe offers real diversity for dividend investors. Around a third of the global 4%+ dividend yield universe can be found in Europe, and about 30% of European stocks provide a yield of 4% or more.

All European equity sectors currently offer a dividend yield in excess of the ten-year bund. Seven now offer a yield greater than 4%, and most have a sustainable payout ratio. Real Estate, Telecoms and Utilities are paying out more than 70% of their earnings, whereas the Automobile sector is paying only one-third of its earnings despite an attractive yield of c.4%. 

Overall, the ground is fertile enough for our European strategy to yield more than 5% currently. That’s even more than our high dividend income product!


Asia: the next dividend frontier

Asia’s outperformance vs. global markets has only just begun after six years in the doldrums. In our view, there’s more to come. Earnings are recovering, valuations are reasonable and liquidity is plentiful. 

The region is also becoming much more attractive as a dividend destination. Its companies have been steadily increasing their dividends for some time, yet there’s still greater scope for dividend growth than, for example, in the UK. You also get more natural diversification – dividend payers come from across the industry spectrum, including technology.

Japan, for its part, has long been relatively uninspiring for dividend seekers, with low yields and high valuations. But corporate governance has improved and share prices have fallen, and Japan now has the best dividend cover and payout ratio in the world. We’re much more interested in Japan than we used to be, hence the imminent listing of our new SG Quality Income Japan ETF.   



Does it work?

Yields of 4.5% and 5%+ for our Global and European strategies suggest the answer is yes. Since 2013, these ETFs have respectively delivered 20% and 24% more income than the average active manager in their sector – largely because of their consistency. Just once has either ETF yielded less than the average manager in any of the last four years. They’ve also reduced risk by 15% and 6% respectively in that time.  And, they’ve done all of this for just 0.45%. Why would you pay more for less?


Consistently higher yield

Source: Lyxor & Morningstar. Average additional yield over the yield of the Morningstar universe of European high dividend yield and equity income funds (2014, 2015, 2016 and 2017 year-to-date to 31/08/2017). Average additional yield over the yield of the Morningstar universe of Global high dividend yield and equity income funds (2014, 2015, 2016 and 2017 year-to-date to 31/08/2017) Past performance is no guarantee of future returns.


Unless otherwise noted, all opinions/data sourced from SG Cross Asset & Global Quantitative Research teams. Opinions expressed are as at 21 September 2017.


This document is for the exclusive use of investors acting on their own account and categorised either as “Eligible Counterparties” or “Professional Clients” within the meaning of Markets In Financial Instruments Directive 2004/39/EC. 

This document is of a commercial nature and not of a regulatory nature. This document does not constitute an offer, or an invitation to make an offer, from Société Générale, Lyxor International Asset Management or any of their respective affiliates or subsidiaries to purchase or sell the product referred to herein. 

We recommend to investors who wish to obtain further information on their tax status that they seek assistance from their tax advisor. The attention of the investor is drawn to the fact that the net asset value stated in this document (as the case may be) cannot be used as a basis for subscriptions and/or redemptions. The market information displayed in this document is based on data at a given moment and may change from time to time. The figures relating to past performances refer or relate to past periods and are not a reliable indicator of future results. This also applies to historical market data. The potential return may be reduced by the effect of commissions, fees, taxes or other charges borne by the investor. 

Lyxor International Asset Management (Lyxor ETF), société par actions simplifiée having its registered office at Tours Société Générale, 17 cours Valmy, 92800 Puteaux (France), 418 862 215 RCS Nanterre, is authorized and regulated by the Autorité des Marchés Financiers (AMF) under the UCITS Directive and the AIFM Directive (2011/31/EU). Lyxor ETF is represented in the UK by Lyxor Asset Management UK LLP, which is authorised and regulated by the Financial Conduct Authority in the UK under Registration Number 435658. 


Research disclaimer

This material reflects the views and opinions of the individual authors at this date and in no way the official position or advices of any kind of these authors or of Lyxor International Asset Management and thus does not engage the responsibility of Lyxor International Asset Management nor of any of its officers or employees. This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and principal trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, principal trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research.

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