Emerging Global Advisors today launched the EGShares Emerging Markets Dividend Growth ETF (EMDG), making it what the company called the first emerging markets dividend growth exchange-traded fund at a time when many developing-markets companies are maturing and turning their attention to raising dividends.
EMDG, which is based on the FTSE Emerging All Cap ex-Taiwan Diversified Capped Dividend Growth 50 Index, comes with an annual expense ratio of 0.85 percent, or $85 for each $10,000 invested—a similar price tag to many funds marketed by the New York-based firm that focuses exclusively on ETFs targeting the developing world.
“Many emerging market-based multinational companies have demonstrated their ability to increase dividends,” Marten Hoekstra, Emerging Global’s chief executive officer, said today in a press release. of Emerging Global Advisors. “We launched EMDG as an investment tool to enable dividend growth investors to implement their investment strategy in emerging markets and diversify dividend yield sources.”
Emerging Global’s aim to bring to market a yield-rich fund is hardly new, but its focus on a dividend growth strategy in the emerging markets is. In sum, the rollout reflects concerns about the low-rate environment that follows the crash of 2008-2009, and growing fears that all but short-dated bonds present investors with the very real prospect of capital losses as the Federal Reserve begins to shift policy toward normalizing official rates.
Emerging Global Advisors and FTSE collaborated to design the FTSE index on which the fund is based. The screen takes into account dividend quality and growth, and dividend payout ratios.
EGShares’ marketing of the fund is also consistent with a turn the company has made since its splashy 2009 debut that was characterized by bringing to market many strategies that in some ways were too specific in geography and theme for investors still getting comfortable with broad ETFs such as the iShares MSCI Emerging Markets Index Fund (EEM).
Since then, Emerging Global has tended to focus on strategies that encompass all the various developing markets, but that are packaged in themes—such as dividend growth—that resonate in broader investment markets.
The nearly $1 billion EGShares Emerging Markets Consumer ETF (ECON) is the ultimate example of this shift, and it now commands more than 75 percent of all the firm’s assets.
Emerging Global—including EMDG—now has 23 funds, with a total of $1.31 billion in assets under management, according to data compiled by IndexUniverse.
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