ETF Spotlight: Low-Volatility Emerging Market Dividends

ETF Trends

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

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

Max Chen contributed to this article.

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