Dividend Funds

There are more dividend funds available for investors in recent years. Dividends are becoming an increasing popular measure for investment performance. Here is a list of dividend funds I can find from various sources. I will update this list when I seek out more information over time.

iShares Dow Jones Select Dividend Index Fund - DVY
Inception: 11/3/2003
Net Assets: $6,257,704,000

The iShares Dow Jones Select Dividend Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones Select Dividend Index (the "Index"). The Index is comprised of one hundred of the highest dividend-yielding securities (excluding REITs) in the Dow Jones U.S. Total Market Index, a broad-based index representative of the total market for U.S. equity securities.

PowerShares High Yield Equity Dividend Achievers Portfolio (PEY)
Inception: 12/9/2004
Net Assets: $459,690,000

PowerShares High Yield Equity Dividend Achievers Portfolio seeks investment results that, before expenses, generally correspond to the price and yield performance of the Mergent Dividend Achievers 50 Index. The Index is comprised of the 50 highest-yielding companies with at least 10 years of consecutive dividend increases. There is no assurance that the price and yield performance of the benchmark index for the fund can be fully matched.

PowerShares International Dividend Achiever Portfolio (PID)
Inception: 9/15/2005
Net Assets: $170,843,000

The fund seeks investment results that correspond to the price and yield of an equity index called the broad Dividend Achievers Index. The Fund may invest 90% of its total assets in dividend paying non US common stocks that comprise the Broad Dividend Achievers Index. The stocks are selected principally on the basis of their consecutive years of dividend growth as pursuant to a proprietary selection methodology. The Fund may invest a small portion of the stocks in small and medium capitalization stocks.

PowerShares Dividend Achiever Portfolio (PFM)
Inception: 9/15/2005
Net Assets: $23,449,000

The fund seeks investment results that correspond to the price and yield of an equity index called the broad Dividend Achievers Index. The fund may normally invest 90% of its total assets in dividend paying common stocks that comprise the Broad Dividend Achievers Index.

StreetTRACKS SPDR Dividend (SDY)
Inception: 11/8/2005
Net Assets: $100,263,000

The Fund's investment objective is to replicate as closely as possible before expenses the price and yield of the S&P High Yield Dividend Aristocrats Index (the "Dividend Index"). The Fund uses a passive management strategy designed to track the price and yield performance of the Dividend Index. The Dividend Index is designed to measure the performance of 50 highest dividend yielding S&P Composite 1500 constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 25 years.

First Trust Morningstar Dividend Leaders (FDL)
Inception: 3/15/2006
Net Assets: $30,980,000

The Fund is an exchange-traded that seeks investment results that correspond generally to the price and yield of an equity index called the Morningstar Dividend Leaders Index.

Vanguard Dividend Appreciation Index ETF (VIG)
Inception: 4/21/2006
Net Assets: $40.55 M

The Fund seeks to provide competitive long-term growth of capital and increasing income. The fund's target benchmark is the Mergent Dividend Achievers Select Index a subset of the Mergent Dividend Achievers Index a market-capitalization weighted index of stocks with a consistent history of increasing dividends. VIG and VDAIX are different classes of the same fund.

Vanguard Dividend Appreciation Index Investor Shares (VDAIX)
Inception: 4/27/2006
Net Assets: $67.74 M

The investment seeks to track the performance of a Mergent Dividend Achievers Select index that measures the investment return of common stocks that have a record of increasing dividends over time. The fund attempts to replicate the target index by investing all, or substantially all, of assets in the stocks that make up the index, holding each stock in approximately the same proportion as weighting in the index. VIG and VDAIX are different classes of the same fund.

WisdomTree Dividend Funds
Inception Date: 6/16/2006

WisdomTree Investments, Inc. and its subsidiary develop domestic and international stock indexes that serve as the basis for exchange traded funds (ETFs) issued by the WisdomTree Trust, institutional funds, and other financial products sponsored by the company. Its subsidiary, WisdomTree Asset Management, Inc., is registered as an investment adviser with the Securities and Exchange Commission and is the investment adviser to the WisdomTree Trust, a family of 20 fundamentally weighted ETFs based on proprietary dividend-weighted indexes. The company was incorporated in 1985 and is based in New York City. This fund manager issued 20 exchanged traded funds related to dividends. These funds are listed here.

WisdomTree Total Dividend Fund (DTD)
WisdomTree High - Yielding Equity Fund (DHS)
WisdomTree Dividend Top 100 Fund (DTN)
WisdomTree Large Cap Dividend Fund (DLN)
WisdomTree Mid-Cap Dividend Fund (DON)
WisdomTree Small Cap Dividend Fund (DES)

WisdomTree DIEFA Fund (DWM)
WisdomTree DIEFA High-Yielding Equity Fund (DTH)

WisdomTree International Dividend Top 100 Fund (DOO)
WisdomTree International Large Cap Dividend Fund (DOL)
WisdomTree International Mid-Cap Dividend Fund (DIM)
WisdomTree International Small Cap Dividend Fund (DLS)

WisdomTree Pacific ex-Japan High-Yielding Equity Fund (DNH)
WisdomTree Pacific ex-Japan Total Dividend Fund (DND)

WisdomTree Japan High - Yielding Equity Fund (DNL)
WisdomTree Japan Small Cap Dividend Fund (DFJ)
WisdomTree Japan Total Dividend Fund (DXJ)

WisdomTree Europe High - Yielding Equity Fund (DEW)
WisdomTree Europe Small Cap Dividend Fund (DFE)
WisdomTree Europe Total Dividend Fund (DEB)

Claymore/Zacks Yield Hog ETF (CVY)
Inception: 09/21/06
Net Assets: $5 million

Claymore/Zacks Yield Hog ETF is an exchange-traded fund which employs a passive management investment approach designed to replicate, before expenses, the performance of the Zacks Yield Hog Index. There is no assurance that the price and yield performance of the Index can be fully matched.

The innovative Zacks Yield Hog Index is the highest yielding domestic index to date. Additionally, it is the first yield-oriented index to combine equities, preferred stocks, REITs, master limited partnerships, ADRs, and closed-end funds.

The objective of The Zacks Yield Hog Index(TM) is to select a diversified group of securities with the potential to outperform, on a risk adjusted basis, the Dow Jones US Select Dividend Index and other benchmark indices. Designed to identify companies with potentially high income and superior risk-return profiles, the index is adjusted quarterly or as required to assure timely stock selection. The index's constituent methodology utilizes multi-factor, proprietary selection rules to identify those securities that offer the greatest potential from a yield risk/return perspective, while maintaining global/industry diversification. The index is comprised of 125 to 150 of the highest ranking securities, chosen and weighted based on a rules based quantitative ranking methodology proprietary to Zacks. The Zacks Yield Hog Index(TM) is published by the American Stock Exchange under the ticker symbol ZAXYH.

Vanguard High Dividend Yield ETF & Fund (VYM & VHDYX)
Inception: 11/16/06
Net Assets: $5 million

FTSE and Vanguard have co-developed a FTSE High Dividend Yield Index. The new custom index consists of stocks traded in the U.S. stock exchanges. Real estate investment trusts (REITs) are removed from the index. Stocks that have not paid a dividend during the previous 12 months are also removed from the index. The remaining stocks are ranked by annual dividend yield and included in the target index until the cumulative market capitalization reaches 50% of the total market cap of this universe of stocks.

Like many other Vanguard funds, this fund has two classes with slightly different management fees (0.25% versus 0.40%).

Kelly Criterion

The first time I heard about Kelly Criterion was many years ago when I was reading a book about horse racing. When I met Max, I started to notice that he talked about Kelly Formula several times. Recently, Youhang talked about Kelly Criterion related to the investment size. After checking Wikipedia, I learned more about Kelly Criterion.

K = P – Q / B

K – Fraction of current bankroll to wager
B – Odds received on the wager (winning ratio)
P – Probability of winning
Q – Probability of loosing = 1 – P

For example, if the winning ratio is 10/9 (11.11%), which is the average annual return for the stock market index; P and Q are 1/2 (50%). Using the above formula we can calculate the Kelly fraction as 5%.

K = 0.5 – 0.5 / (10/9) = 0.05 = 5%

For another example, if the winning ratio is 100/94 (6.38%), which is the average annual return for the bond market index; P and Q are 1/2 (50%). Using the above formula we can calculate the Kelly fraction as 3%.

K = 0.5 – 0.5 / (100/94) = 0.03 = 3%

I am not very sure about the correctness of using the Kelly Formula. If the above calculations are correct, then one should at least invest 20 independent stocks and 30 independent bonds in order to meet the Kelly Criterion.

Commodity Funds

Commodities are becoming an increasingly popular investment vehicle recently. Major institutions are developing new mutual funds to satisfy the investment needs. The following commodity funds are the investment universe I can find from various sources for now. This is one of the newest asset classes to be added to sophisticated investment portfolios. The following mutual funds are listed according to their inception dates.

Central Fund of Canada (CEF)
Inception Date: 9/15/1983
Total Net Assets: $821,630,000

This is a closed-end mutual fund. Central Fund of Canada Limited is a closed-end investment management company. The primary objective of the fund is capital appreciation. The fund provides an alternative for investors interested in holding marketable gold and silver-related investments. The fund invests primarily in long-term holdings of gold and silver bullion and does not actively speculate on short-term changes in gold and silver prices. The stated investment policy of the Board of Directors requires Central Fund to maintain a minimum of 90% of its net assets in gold and silver bullion. At least 85% must be in the form of physical bullion holdings. The physical gold and silver bullion holdings are subject to insurance coverage against destruction, disappearance or wrongful abstraction. All expenses of handling, storage and insurance of bullion are paid by Central Fund. Unlike most other forms of bullion investment, there are no storage costs paid by the investor.

Oppenheimer Real Asset Class C (QRACX)
Inception Date: 3/31/1997
Total Net Assets: $1.9 billion

This is a mutual fund. The Fund is the first of its kind - providing retail investors with exposure to commodities. Through investments in securities whose value is linked to the commodity markets, investors receive full dollar-for-dollar exposure to this asset class. Commodities may help protect your portfolio against volatility in the financial markets. That's because tangible goods, such as agriculture or petroleum, are impacted by different factors than stocks or bonds, especially in difficult markets. Typically, when inflation rises, the cost of producing goods or the cost of borrowing funds increases. It may negatively impact stock or bond investments. Commodities, however, can benefit in this environment, as rising prices for raw materials (which are commodities) drive up performance.

The Fund invests primarily in derivative instruments that entail potentially higher volatility and risk of loss than traditional stock or bond investments. It may also invest in foreign securities, which may be more volatile and involve additional expenses and special risks, including currency exchanges, political and economic uncertainties and up to 10% in lower rated 'junk' bonds, which are more at risk of default. The Fund may hold a higher concentration of energy related natural resources, which may significantly influence results. Appropriate for investors seeking total return over the long term, plus the potential to enhance diversification of an existing mixed asset portfolio. Investing in securities may be volatile.

Pimco Commodity Real Return Strategy Fund Class D (PCRDX)
Inception Date: 11/29/2002
Total Net Assets: $1,530.20 M

This is a mutual fund. The investment seeks maximum real return consistent with prudent investment management. The fund normally invests in commodity-linked derivative instruments backed by a portfolio of inflation-indexed securities and other fixed income instruments. It may invest up to 10% of assets in high yield securities. The fund may also invest up to 30% of assets in securities denominated in foreign currencies. It is non-diversified.

streetTRACKS Gold Shares (GLD)
Inception Date: 11/18/2004
Total Net Assets: $7,333,423,000

This is an ETF. The investment objective of the Trust is for the shares to reflect the performance of the price of gold bullion less the expenses of the Trust's operations. The Shares are designed for investors who want a cost-effective and convenient way to invest in gold.

iShares COMEX Gold Trust (IAU)
Inception Date: 1/21/2005
Total Net Assets: $811,305,000

This is an ETF. The iShares COMEX Gold Trust seeks to correspond generally to the day-to-day movement of the price of gold bullion. The objective of the Trust is for the value to reflect at any given time the price of gold owned by the Trust at that time less the expenses and liabilities of the Trust.

Rydex Commodities Fund Class H (RYMBX)
Inception Date: 05/25/2005
Total Net Assets: $29.4 M

This is a no-load mutual fund. The investment seeks to provide investment results correlating to the performance of the GSCI index The fund seeks 100% (but at all times at least 80%) exposure to the performance of the commodities markets. The fund is non-diversified.

Powershares DB Commodity Index Tracking Fund (DBC)
Inception Date: 2/3/2006
Total Net Assets: $651.53 M

This is an ETF. DBC is an innovative product that offers investors unprecedented transparency and access to a commodity index. DBC's returns are expected to track the performance of the Deutsche Bank Liquid Commodity Index Excess Return (DBLCI). The DBLCI is a rules-based index based on six liquid futures contracts on Light Sweet Crude Oil, Heating Oil, Gold, Aluminum, Corn and Wheat.

Fidelity Strategic Real Return Fund (FSRRX)
Inception Date: 03/31/2006
Total Net Assets: $2,529.74 M

This is a no-load mutual fund. Allocates the fund's assets among four general investment categories: inflation-protected debt securities, floating-rate loans, commodity-linked notes and related investments, and real estate investment trusts (REITS) and other real estate related investments. The fund uses a neutral mix of approximately 30% inflation-protected debt securities; 25% floating-rate loans, 25% commodity-linked notes and related investments, and 20% REITs and other real estate related investments. The fund invests in domestic and foreign issuers. The fund manager analyzes a security's structural features and current pricing, its issuer's potential for success and the credit, currency, and economic risks of the security and its issuer to select investments.

United States Oil Fund (USO)
Inception Date: 4/10/2006
Total Net Assets: $0.42 Billion

This is an ETF. The investment seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The fund will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil. The fund is non-diversified.

iShares Silver Trust (SLV)
Inception Date: 4/21/2006
Total Net Assets: $1,105,326,396

The objective of the trust is for the value of the iShares to reflect at any given time the price of silver owned by the trust at that time less the trust's expenses and liabilities. The trust receives silver deposited with it in exchange for the creation of Baskets of iShares sells silver as necessary to cover the trust expenses and other liabilities and delivers silver in exchange for Baskets of iShares surrendered to it for redemption. The iShares are intended to constitute a simple and cost-effective means of making an investment similar to an investment in silver.

iShares GSCI Commodity-Indexed Trust (GSG)
Inception Date: 7/21/2006
Total Net Assets: $46,398,615

This is an ETF. The investment objective of the Fund is to seek investment results, through the Trusts investment in the commodity pool iShares, Goldman Sachs Commodity-Indexed Investing Pool LLC or the Investing Pool, that correspond generally, but are not necessarily identical, to the performance of the Index, before the payment of expenses and liabilities of the Trust and the Investing Pool. The Investing Pool will hold long positions in futures contracts on the Goldman Sachs Commodity Index Excess Return Index, called CERFs, which are futures contracts listed on the Chicago Mercantile Exchange that have a term of approximately five years after listing and whose settlement at expiration is based on the value of the Goldman Sachs Commodity Index Excess Return Index.