ETF Spotlight: Low-Volatility Emerging Market Dividends

tlydon@globaltrend.com (Tom Lydon)
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ETF Spotlight on EGShares Low Volatility Emerging Market Dividend ETF (HILO) , part of an ongoing series.

Assets : $64.1 million.

Objective : The EGShares Low Volatility Emerging Markets Dividend Fund tries to reflect the performance of the Indxx Low Volatility Emerging markets Dividend Index, which is a dividend yield weighted stock index that tries to provide a higher yield and lower relative volatility than the MSCI Emerging Markets Index. [Bargain Hunters Flock to Vanguard Emerging Market ETF]

Holdings : Top holdings include: Major Cineplex Group PCL 5.4%, Magyar Telekom Telecommunications PLC 5.1%, Teleckomunikacja Polska SA 4.9%, Telefonica Brasil SA 4.9% and Quality Houses PCL 4.7%.

What You Should Know :

  • Emerging Globl Advisors sponsors the fund.

  • HILO has an expense ratio of 0.85%.

  • The fund has 30 holdings and the top 10 make up 44.7% of the overall portfolio.

  • Sector allocations include: telecoms 29.5%, industrials 16.0%, utilities 15.3%, financials 12.6%, consumer goods 10.5%, consumer services 8.4% and tech 3.6%.

  • Country allocations include: Thailand 16.9%, China 16.7%, Brazil 16.1%, South Africa 14.7%, Hungary 5.1%, Malaysia 5.0%, Poland 4.9%, Czech Republic 4.1%, Mexico 3.8% and India 3.6%.

  • The underlying index has a 6.44% dividend yield.

  • REM is up 1.8% over the past month, down 8.1% over the last three months and up 1.8% year-to-date.

  • “In the back-test, this index has provided higher returns with less volatility over the last four years, relative to the market-cap-weighted MSCI Emerging Markets Index,” according to Morningstar analyst Patricia Oey. “While we cannot predict the future performance of this fund, we expect this fund to be less volatile than a market-cap-weighted fund given its heavy weightings in telecom and utilities companies, which are lower-volatility sectors.”

The Latest News :

  • Emerging market equities turned around from a two-week low as speculators are betting on more economic stimulus in China and South Korea, Bloomberg reports.

  • “It looks like we’re on a more aggressive path for stimulus and that’s helping to mitigate concerns a little bit,” Win Thin, global head of emerging-market strategy at Brown Brother Harriman & Co., said in the article. “I also don’t think the China was as disastrous as people feared it could be so that’s triggered some buying of emerging-market assets. We’ll probably end the week on a firm note, though the underlying message is still one of slowing.”

  • Seeking higher yields, investors piled $1.14 billion into emerging market funds in the week ended Wednesday, up from $874 million in inflows last week, reports Georgia Wells for The Wall Street Journal.

EGShares Low Volatility Emerging Market Dividend ETF

For past stories in this series, visit our ETF Spotlight category.

Max Chen contributed to this article.

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