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New Emerging Market Dividend ETF from iShares

tlydon@globaltrend.com (Tom Lydon)

BlackRock’s iShares has introduced a new emerging markets exchange traded fund targeting dividend stocks that will compete head-to-head with a large ETF managed by WisdomTree Investments (NasdaqGM: WETF - News).

BlackRock also launched a dividend fund that focuses on the Asia/Pacific region.

The new ETFs are :

  • iShares Emerging Market Dividend Fund (NYSEArca: DVYE - News): Top sectors are telecom, industrials and basic materials; the index is weighted by annual dividend yield.
  • iShares Asia/Pacific Dividend 30 Index Fund (NYSEArca: DVYA - News): Largest sectors are financials, consumer services and telecom. The top countries represented are Australia, Hong Kong, Japan, New Zealand and Singapore.

Both funds have an expense ratio of 0.49%.

“The new iShares funds are well-positioned to marry international growth potential with the value characteristics of dividend solutions in an ETF, ” Darek Wojnar, head of U.S. product development at iShares, said. “The funds also offer investors the added benefit of a liquid investment approach, representing flexibility in establishing and adjusting allocations. A basket of high-dividend paying equities can often provide investors a cost-effective, transparent way to diversify their global equity income stream.” [Can Dividend ETFs Sustain Their Performance?]

The new emerging market ETF “clearly is designed to go after the sweet spot carved out by the very popular WisdomTree Emerging Markets Equity Income (NYSEArca: DEM) , which charges 0.63%,” says Morningstar analyst Robert Goldsborough. The WisdomTree ETF has $3.3 billion in assets.

“In today’s market environment, traditional sources of income are offering historically low yields,” said Wojnar. “Emerging markets and the developed markets in the Asia/Pacific region are expected to lead global economic growth and offer an attractive opportunity for investment income in the near term. Income-seeking investors can use our dividend–paying funds to efficiently take advantage of potential economic growth in these regions, and possibly reduce portfolio volatility compared with growth-oriented stocks.” [Total Return: Why Dividends  Matter for ETFs]

iShares launched a dividend focused ETF back in 2003, the iShares Dow Jones Select Dividend Index Fund (NYSEArca: DVY), which has about $10.1 billion in assets under management. [Best Dividend ETFs]

The two new ETFs “combine last year’s hot theme — dividend-paying stocks — with this year’s, investing in emerging markets,” writes Brendan Conway at Barron’s.

WisdomTree Emerging Markets Equity Income recently surpassed $3 billion in assets under management.

“Historically, investors have focused on large-cap blue-chip companies in developed countries when looking for significant generators of dividends. Yet our research establishes that in recent years the emerging markets delivered the fastest growth in aggregate dividend streams among the major regions, with more than $175 billion in dividends paid in 2011,” said Jeremy Schwartz, WisdomTree director of research.

“Contrary to conventional wisdom, investors do not need to make a trade-off between the growth potential of the emerging market region in order to achieve exposure to dividend-paying stocks,” he added.

WisdomTree Emerging Markets Equity Income

Tisha Guerrero contributed to this article.