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Dividend ETF trades spike Add to ...

A reader pointed out that somebody, somewhere, has grown awfully interested in the iShares Dow Jones Canadian dividend exchange traded fund : The number of units traded has spiked over the past week to record highs for the ETF.

The fund, which began trading near the end of 2005, has rarely traded more than 250,000 units a day over the past year. Over most of the past week, though, volume has risen above one million units - and surpassed 1.5 million units on Monday and Tuesday. The unit price has risen just 1 per cent over this period.

Are investors suddenly head-over-heels for baskets of dividend stocks? Oliver McMahon, director of product management for iShares ETFs at BlackRock Canada, told us that they do sometimes see jumps in volume as large investors rebalance their portfolios or one large trade goes through.

"I think what's nice to see is that it doesn't appear to have moved the price or distorted returns for any unit holders," he said. "The depth in the product is there. But it's not always clear why something has happened."

To make matters a little more baffling, the trading volume for the iShares Dow Jones Select dividend index fund , which tracks U.S. stocks, has shown no abnormal spike. Indeed, volume levels are well off their peaks.

Coincidentally, or not, iShares launched the iShares Diversified Monthly Income fund on Thursday, an ETF that invests in other ETFs. It replaces the former iShares S&P/TSX Income Trust fund, which traded under the same symbol.

"The conversion took place in advance of the changes to the federal tax regulations governing income trusts that will come into effect in January 2011," iShares said in a press release.

Are income trust investors rotating into the dividend ETF instead?

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