High‑yield ETFs: Selection criteria and the case of ChinaAMC’s 3590 and 3592 Published 25 October 2026, 08:53 HKT – by Li Sheng‑yang High‑yield exchange‑traded funds (ETFs) have attracted attention in recent months, but past performance does not guarantee future results and a high dividend yield is not always advantageous. Li Sheng‑yang, writing in a series of columns on high‑yield ETFs, notes that dividend frequency can also be a drawback, as frequent payouts may be eroded by platform fees. He also cautions that ETFs that pay out principal rather than dividends are essentially “getting rich by being foolish.” In his latest column, Li focuses on two ETFs issued by ChinaAMC that target Hong Kong high‑yield stocks: the 3590 “Dividend” ETF and its “Accumulation” counterpart, 3592. Both funds hold the same underlying securities, but 3590 distributes dividends to investors while 3592 reinvests all distributions back into the fund. Rigorous selection and risk‑control mechanisms Li explains that the two ETFs employ a multi‑layered screening process designed to prevent companies from “gaming the system” by issuing large special dividends or borrowing to pay dividends. The key criteria are: 1. Dividend stability – a company must have paid dividends in at least two of the last three years. Companies whose three‑year average dividend‑to‑earnings ratio exceeds 150 % are automatically excluded to guard against debt‑financed payouts. 2. Profitability quality – the funds calculate the average return on equity (ROE) and its standard deviation over the past eight quarters. Firms that rank in the bottom 10 % of profitability are removed, ensuring that dividends can be sustained. 3. Volatility control – the top 10 % of stocks with the highest five‑year weekly return volatility are excluded. In the weighting scheme, expected dividend yield is combined with five‑year price volatility, giving higher weight to lower‑volatility stocks to strengthen the portfolio’s defensive profile. Fund characteristics – Net asset value – approximately 400 million yuan. – Daily turnover – 3590 trades about 1.3 million yuan per day; 3592 trades around 100 000 yuan. – Management fee – 0.65 % per annum, comparable to other high‑yield ETFs. – Price and liquidity – the funds trade near 10 yuan per share, with a standard lot of 100 shares, so an initial investment of roughly 1 000 yuan is sufficient for most retail investors. Li notes that while 3590 offers immediate cash flow, 3592’s accumulation strategy allows dividends to be automatically reinvested, creating a compounding effect that can be more beneficial for long‑term investors. He expresses a personal preference for 3592, citing its lower transaction costs and the potential for snowball growth. Context Li’s columns emphasize that high‑yield ETFs are not risk‑free. A high dividend yield can sometimes signal financial distress or reliance on debt. Investors should therefore evaluate the underlying selection methodology and risk controls rather than relying solely on yield figures. The article concludes that, in a volatile market environment, disciplined selection and the power of compounding may provide a more prudent path to wealth accumulation than chasing immediate cash payouts.
Article source: Sing Tao Electronic Daily | Image credit: Sing Tao Electronic Daily