Update: iShares DivDAX® UCITS ETF (DE) (EUR)

Dividendentitel sind in Zeiten von Niedrigzinsen eine interessante Abwechslung. Zudem gehören DAX-Konzerne zu den spendabelsten Dividendezahlern. Die 15 verschiedenen Einzerwerte sind stark Exportorientiert.

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Rolle im Portfolio

The iShares DivDAX ETF is designed for investors who seek exposure to the higher-yielding large-capitalisation segment of the German stock market. It could be used as core holding for German-based investors or as a tactical tool to manage single-country, dividend-tilted exposure in a globally diversified portfolio.

The portfolio consists of the 15 highest-yielding blue chip companies included in the DAX, diversified across several sectors. All constituents share one common characteristic – they are export-oriented and therefore not highly dependable on Germany or even Europe for revenue generation. Given its global revenue exposure, the DivDAX Index displays high correlations with geographically broad-based indices such as MSCI High Dividend World (70-75%) or MSCI High Dividend Yield Europe (85-90%). As such, the diversification benefits of this ETF within a geographically broad-based equity portfolio are limited. However, by the same token, this ETF could be used as proxy for those markets.

This ETF is suitable for income-seeking investors as it distributes dividends on a quarterly basis.

Fundamentale Analyse

The dividend-focused strategy of this ETF is achieved by using historical dividend yield as an additional weight allocation criterion. The role of dividend reinvestment as a driver of long-term total returns has been extensively documented. By focusing on high yielding stocks, a dividend-enhanced  strategy aims to provide and extra boost. For example, in the five years to April 2015, the DivDAX underperformed its parent DAX index by 2.22% on a price basis, but outperformed it by nearly 5% on a total return basis (i.e. with dividends reinvested).   

Such outperformance is not always guaranteed, however. In fact, DivDAX underperformed the DAX on total return terms during the 2008 financial crisis, as it had a comparatively higher weight in financials. Deleveraging during the post-crisis period, coupled with low interest rates, helped financials to mend their balance sheets and return cash to investors. However DivDAX remains overweight in financials, which could become a drag for performance if they go out of favour again.

The DivDAX Index is not necessarily the best proxy for the German economy given the multinational revenue exposure of its underlying companies. Some of the highest-weighted constituents, such as Siemens, BASF and Daimler derive the bulk of their revenue from the United States or the emerging economies, and so company profitability is less sensitive to developments at home.

Having said that, a key driver of performance for the DivDAX has been the rolling out of Quantitative Easing by the ECB in early 2015.Through the purchasing government bonds, plus additional measures (e.g. zero-bound interest rates), the ECB aims to revive the Eurozone’s economy while boosting inflation. The ECB’s policy has also weakened the EUR against other major currencies, thus improving the competitiveness of the Eurozone-based export oriented companies. Considering the critical contribution the exports of goods and services make to its GDP – estimated at 45-50% – Germany is bound to be one of the main beneficiaries. Besides, the improved outlook for the Eurozone may help allay any concerns about the slowdown of emerging markets on German exporters.

Another positive driver of German corporate profits has been the sharp decline of commodity prices. However, energy prices are highly volatile and can quickly regain the lost ground, which is one of the main risks when investing in cyclically-oriented portfolio of companies.

After a stellar recovery from the 2008 crisis, Germany has experienced a modest above-zero GDP growth since 2012. But overall, the weakening EUR coupled with subdued energy prices and easier financial conditions across the Eurozone could set the scene for growth acceleration. This should provide support to a dividend-oriented strategy.


The DivDAX index objective is to track the total return performance of the 15 DAX companies with the highest dividend yield. Individual stocks are weighted on a free-float market capitalisation basis with capping of 10% to avoid single-name concentration. In the event of an announcement that no dividend will be paid, the index methodology dictates that the company will be removed and replaced with the next DAX constituent. Financials and consumer discretionary are the biggest sectors – 20-25% weighting each, followed by materials (15-20%), industrials (15-20%) and health care (8-10%). Despite a relatively high concentration in the top two sectors, the index overall exposure is well diversified, given the almost even allocations of the remaining sectors and the 10% cap on individual stocks. Compared to the DAX, which holds 30 constituents, the DivDAX index is overweight in financials (6-7%), industrials (3-5%) and telecommunications (3-5%), and underweight in information technology (8-10%), health care (5-7.5%) and consumer staples (3-5%). Amongst the companies with higher weightings are the chemical giant BASF (10-12%) and the industrial conglomerate Siemens (10-12%). The index weightings are adjusted annually in September based on recent dividend payments.


iShares uses full physical replication to replicate the performance of the DivDAX, thus purchasing all securities in the same weightings. The fund uses futures for cash flow and dividend management purposes. This is standard practice and helps limit tracking error. iShares engages in securities lending within this fund to improve its performance. The gross revenues generated from this activity are split 62.5/37.5 between the fund and the lending agent BlackRock, whereby BlackRock covers the costs involved. The fund lent out lent out 0.12% on average over the 12 months ending March 2015. To protect the fund from a borrower’s default, BlackRock takes collateral greater than the loan value. Collateral levels vary between 102.5% and 112% of the value of securities on loan, depending on the assets provided by the borrower as collateral. Additional counterparty risk mitigation measures include borrower default indemnification. Specifically, BlackRock commits to replace the securities that a borrower would fail to return. The indemnification arrangement is subject to changes, and in some cases without notice. Finally, BlackRock limits the amount of assets that can be lent out by this ETF at 50%.


The fund levies a total expense ratio of 0.31%, pricing the product at the upper range of German dividend-biased equity ETFs. Other potential costs include rebalancing costs, bid-ask spreads and brokerage fees. In the year to end April 2015, the fund underperformed its benchmark by 0.45%.


As of this writing, only ComStage offers a dividend-reinvesting ETF tracking the DivDAX Index. ComStage uses synthetic replication and levies a TER of 0.25%.

Another alternative is Deka DAXplus Maximum Dividend ETF, which also tracks an index that provides exposure to some of the highest yielding stocks in Germany. The index is comprised of 20 stocks from a universe of the 110 largest stocks trading in Frankfurt. The ETF uses physical replication, levies a total expense ratio of 0.30% and, given its relative breadth, offers a slightly better degree of diversification than the iShares ETF.

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Über den Autor

Morningstar Analysts   -