Stoxx has licensed its new iStoxx MUTB Asia/Pacific Quality Dividend 100 index to Taiwanese asset manager Yuanta Securities Investment Trust for a new passive fund.

The index is the sixth product co-developed between Stoxx and Mitsubishi UFJ Trust and Banking, and it is the first Asia-Pacific smart beta play to be made available to Taiwanese retail and institutional investors.

Dividend investing is one of the main investment themes in the low yield environment globally and also in Taiwan, according to Shirley Low-Storchenegger (pictured), head of Asia Pacific at Stoxx. "Focusing on dividend alone is insufficient; what is also important is the selection of quality companies and reduction of volatility," said Low-Storchenegger. "Many current high dividend index strategies tend to focus on selecting stocks based on actual dividend yield. However, there's insufficient emphasis on the ability of companies to continue paying dividends. We've developed this index to handle that dividend reduction risk using a quality factor from a financial perspective, and a volatility factor from a non-financial perspective."

The iStoxx MUTB Asia/Pacific Quality Dividend 100 index selects 100 stocks from the Stoxx Asia/Pacific 600 Index, with weightings based on a combined factor of the inverse of each stock's standard price deviation for the past 60 months, the historical return for the past 12 months, the inverse measure of debt versus shareholder equity, and the inverse of the standard net income deviation for the past 60 months.

Home bias-prone local investors have the need to diversify beyond their domestic market to nurture a stronger risk-return profile, Low- Storchenegger said, adding that Stoxx is in constant discussion with Yuanta and Mitsubishi, following the memorandum of understanding signed in July 2016 "to research and develop smart beta strategies together".

"With the aging population problem growing, smart beta passive investment will be getting more important to help reduce the cost of investing for investors' retirement planning," said Low-Storchenegger. "However, as smart beta is still new to investors in the region, we see the need to increase the awareness through education which we are constantly offering or with our local partners."

Low-Storchenegger also said that Stoxx continues to strengthen its smart beta footprint in the Asia-Pacific region and pointed at the recently launched Stoxx China A Minimum Variance index strategy.

Licensing the index is 'in line with our holistic approach in offering ETFs that meet investors' needs and provide more smart-beta solutions to the market', according to Julian Liu, chief executive and president of Yuanta Securities Investment Trust.

The move comes after the three companies signed a memorandum of understanding last year to develop and expand the smart beta footprint in Taiwan. Yuanta is an active structured products provider in Asia, with 1,004 offers in SOuth Korea, of which 381 are live, as well as 124 products in Taiwan, including 76 live products. Stoxx underlyings have been featured in over 39,800 products in Asia-Pacific of which 20,123 are live products including 463 marketed in Taiwan.

Related stories:
Korea and Taiwan exchanges cross-list ETFs

Smart-beta products will appeal to many Taiwanese investors, MUTB

Stoxx increases focus in Apac, Eurostoxx 50 enters Taiwan via Yuanta tracker