Although 2014 has been another good year in terms of dividend increases (nearly 30 companies boosted payouts just last week), exchange traded funds with a dividend tilt have not been immune to the market’s disappointing start to 2014.
Investors pulled almost $10 billion from equity-based ETFs last month, but they were just getting started as $22 billion was yanked from ETFs holding stocks last week. Some dividend ETFs have been bit by the outflow bug. [Utilities Buoy Some Dividend ETFs]
Others have not, including the WisdomTree Global Equity Income Fund (DEW) . DEW has actually brought in almost $2.4 million since the start of the year. That may not sound like much, but when $22 billion is pulled from equity ETFs in a single week, DEW’s asset-gathering acumen looks impressive.
The disclaimer with DEW is that of the 38 countries represented in its lineup, 15 are emerging markets. However, that group accounts for just about 17% of the fund’s weight. The U.S. is DEW’s top-country weight at almost 17%, but despite U.S. and emerging markets equities combining for over a third of DEW’s weight, the ETF is down just 2% this year, a performance that is less bad than some of the most popular U.S. dividend ETFs.
Europe has play a part in DEW’s relative sturdiness and while investors have been eager to pull capital from U.S. and emerging markets ETFs, some of that cash is flowing to Europe-focused funds. “The bright spots for flows in January were in non-US Developed Markets Equity, which gathered $11.2bn as a number of key themes from 2013 continued into the new year,” said BlackRock. “Pan-European Equity brought in $4.0bn aided by the most encouraging January Euro Zone PMI reading since 2011.” [Where Some of That Lost EM Money is Flowing]
Fifteen of the countries found in DEW are classified as developed Europe nations, led by a combined 27.5% allocation to the U.K., France and Germany. U.K.-based firms have been among the better non-U.S. dividend growers in recent years. [The Value of U.K. Dividends]
DEW is home to about 500 stocks. By virtue of that mammoth lineup, no stock receives a weight above 1.66% in the ETF, insulating the fund from the potentially negative effects of excessive weights to a small number of stocks.
DEW does not subscribe to selecting its components based on past dividend increases. Rather, the WisdomTree Global Equity Income Index (WTGDHY) screens for companies with market caps above $2 billion in the top 30% in terms of dividend. Constituents are based on annual cash dividends paid.
Over a quarter of DEW’s sector weight goes to financials, which could be a positive catalyst for the fund this year on expectations of bank dividend growth in the U.S. and developed Europe. [Time to Make a Deposit With European Banks]
Telecom, energy and utilities combine for almost 37% of DEW’s weight.
WisdomTree Global Equity Income Fund