Dynamic Active Global Dividend ETF

Overview

The Dynamic Active Global Dividend ETF is an exchange-traded fund that focuses on investing in global dividend-paying stocks. Managed by Dynamic Funds, this ETF aims to provide investors with exposure to companies that are expected to deliver strong dividend growth, enhancing potential income and total returns.

The fund typically employs an active management strategy, allowing portfolio managers to select securities based on market conditions and investment opportunities rather than strictly following a set index. This approach can help capture potential alpha through tactical asset allocation and security selection.

Analyst Forecast

STA Research (Analyst Rank#8) assigned a “Hold” rating on Dynamic Active Global Dividend ETF, and a 12 month target forecast of $50 per share.

The average target price forecast for DXG is set at CAD 50.00 over the next 12 months. This represents a potential downside of approximately 19.5% from its current trading price. The “Hold” rating suggests that analysts do not see significant short-term upside, indicating a cautious stance on the stock.

Stock Target Advisor Analysis

Stock Target Advisor provides a bearish outlook on DXG categorizing it as “Very Bearish.” This classification is based on the absence of positive signals and the presence of three negative signals. Such signals can reflect issues like poor performance relative to benchmarks, high volatility, or unfavorable market conditions that could affect the ETF’s performance.

Performance Metrics

• 1 Week Change: +2.04%
• 1 Month Change: +2.05%
• 1 Year Change: +38.45%

While the ETF has shown impressive annual growth, the recent performance over shorter time frames has been modest. This may suggest that while long-term investors could have benefitted from holding the ETF, recent price action does not indicate a strong momentum shift.

Fundamental Analysis

This analysis provides a composite scorecard based on various evaluation criteria deemed important by financial analysts. It’s crucial to note that this analysis does not constitute a buy or sell recommendation; rather, it serves as a tool for understanding potential investment risks and benefits.

Positive Fundamentals

• Nothing Particularly Positive: Currently, the analysis indicates that there are no standout positive attributes for the ETF, suggesting a cautious outlook. This may be due to its overall performance metrics compared to peers in the same sector.

Negative Fundamentals

1. Below Median Total Returns:
   • Underperformance: Over the past five years, DXG

     has delivered total returns that fall below the median when compared to its peers. This raises concerns for investors seeking growth, as it indicates the fund has struggled to match the performance of other similar investment options.

2. High Volatility:
   • Fluctuating Returns: The returns of this ETF have been notably volatile, exhibiting fluctuations that are above the median for its sector. High volatility can lead to unpredictable performance, which may not align with the investment strategies of risk-averse investors.
   • Risk Tolerance: Given this volatility, potential investors should carefully assess their risk tolerance before considering an investment. If an investor is uncomfortable with significant price swings, this ETF may not be a suitable choice.
3. Poor Risk-Adjusted Returns:
   • Underperformance in Risk Metrics: While the ETF may have periods of outperformance, its risk-adjusted returns are below the median compared to its peers. This means that when adjusting for the level of risk taken, the returns do not justify the investment.
   • Unpredictability: The combination of high volatility and poor risk-adjusted returns suggests that even when returns are positive, they may not be consistent or reliable. This unpredictability is a red flag for many investors.

Outlook

The Dynamic Active Global Dividend ETF presents a complex investment proposition. While its substantial annual gains may attract attention, the projected decline to CAD 50.00 and the “Very Bearish” rating from Stock Target Advisor warrant caution. Investors should weigh these factors against their risk tolerance and investment strategy, particularly in a market environment where dividend-focused strategies can be sensitive to interest rate changes and economic conditions.