U.S. Markets open in 3 hrs 22 mins

An Emerging Markets Play For Rising Oil Prices

ETF Professor

Whether it is on the demand side in China, India, South Korea, or on the production side, in Brazil, Russia and more, emerging markets exchange traded funds have some exposure to oil prices. While the MSCI Emerging Markets Index allocates just 7.29 percent of its weight to the energy sector, oil prices play a part in the benchmark's performance.

For example, the MSCI Emerging Markets Index allocates almost 45 percent of its combined weight to China and South Korea, both of which are net oil importers. The index devotes 10.59 percent of its geographic exposure to Brazil and Russia, which are major crude producers.

Some emerging markets ETFs, including the WisdomTree Emerging Markets High Dividend Fund (NYSE: DEM), are better-suited for taking advantage of rising oil prices.

What Happened

The $2.25-billion DEM tracks the yield-weighted WisdomTree Emerging Markets High Dividend Index.

“The WT EM High Dividend Index was launched in 2007 to track the performance of the highest dividend-paying companies in the region,” WisdomTree said in a recent note.

“The index weights companies that rank in the highest 30 percent by dividend yield using annual cash dividends paid. Since its inception more than 10 years ago, the WT EM High Dividend Index has outperformed its benchmark, the MSCI Emerging Markets Index, by 151 basis points annually — raising the question about whether an investor really needs an active manager to outperform in this 'inefficient' asset class.”

Why It's Important

Against the backdrop of rising oil prices, DEM could offer investors outperformance potential due in large part to the fund's overweight position in Russsian stocks. DEM allocates 13.65 percent of its weight to Russia, well above the 3.32 percent in the MSCI Emerging Markets Index. Russia is the world's largest oil producer.

Overall, DEM devotes 18.6 percent of its weight to energy stocks, making that the fund's second-largest sector exposure. Energy is merely the fifth-largest sector weight in the MSCI Emerging Markets Index.

What's Next

“If we look at how both the WT EM High Dividend Index and the MSCI EM Index fared during periods of rising and falling oil prices, we see very robust returns for emerging markets generally during rising oil prices and very subdued or negative returns during falling oil price environments,” WisdomTree said.

In recent years, the sensitivity of emerging markets stocks to commodities prices has decreased, but for investors looking for a broad-based play with some sensitivity to higher crude prices with an income kicker, DEM is a practical option.

Related Links:

Reasons to Consider Small-Cap ETFs

A Better Commodities ETF

Todd Shriber owns shares of DEM.

See more from Benzinga

© 2018 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Gin, coffee sales give Wetherspoon Christmas cheer
    Business
    Reuters

    Gin, coffee sales give Wetherspoon Christmas cheer

    British pub operator JD Wetherspoon Plc said it enjoyed strong sales over the Christmas period, helped by Britons' new-found fondness for gin and solid demand for coffee drinks. The company, which warned in November about weaker sales, said it still expects pretax profit for the first half of its fiscal year to be lower than a year earlier as it struggles with higher costs, but it maintained its full-year outlook. Wetherspoon follows other UK pub operators, including Greene King Plc, Marston's Plc and Stonegate Pub Company, owner of the Slug and Lettuce pub chain, that have reported higher sales for the period, even as they face cost pressures and slowing consumer spending in Britain amid un...

  • Farmers National Banc (FMNB) Earnings Expected to Grow: Should You Buy?
    Business
    Zacks

    Farmers National Banc (FMNB) Earnings Expected to Grow: Should You Buy?

    Farmers National Banc (FMNB) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2018. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The earnings report, which is expected to be released on January 30, 2019, might help the stock move higher if these key numbers are better than expectations.

  • Is Humana (HUM) Outperforming Other Medical Stocks This Year?
    Business
    Zacks

    Is Humana (HUM) Outperforming Other Medical Stocks This Year?

    The Medical group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Has Humana (HUM) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out.

  • ETFs to Buy on IBM's Annual Revenue Growth Story
    Business
    Zacks

    ETFs to Buy on IBM's Annual Revenue Growth Story

    Investors could tap the opportunity with ETFs having the highest allocation to this tech giant: First Trust NASDAQ Technology Dividend Index Fund TDIV This fund provides exposure to dividend payers within the technology sector by tracking the Nasdaq Technology Dividend Index. The product has amassed about $864.8 million in its asset base while trading in volume of around 94,000 shares per day. It charges 50 bps in annual fees and holds about 97 securities in its basket.

  • Does Market Volatility Impact OptimizeRx Corporation's (NASDAQ:OPRX) Share Price?
    Business
    Simply Wall St.

    Does Market Volatility Impact OptimizeRx Corporation's (NASDAQ:OPRX) Share Price?

    Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). While we should keep in mind that Warren Buffett has cautioned that 'Volatility is far from synonymous with risk', beta is still a useful factor to consider. To make good use of it you must first know that the beta of the overall market is one.

  • Dow CEO: We're going to stop the plastic waste going into the environment
    Business
    Fox Business Videos

    Dow CEO: We're going to stop the plastic waste going into the environment

    Dow CEO Jim Fitterling on China's economic slowdown, the company's spin out, the state of the consumer and efforts to reduce plastic waste.

  • Advanced Micro Devices (AMD) Gains But Lags Market: What You Should Know
    Business
    Zacks

    Advanced Micro Devices (AMD) Gains But Lags Market: What You Should Know

    Heading into today, shares of the chipmaker had gained 18.68% over the past month, outpacing the Computer and Technology sector's gain of 7.59% and the S&P 500's gain of 9.27% in that time. Investors will be hoping for strength from AMD as it approaches its next earnings release, which is expected to be January 29, 2019. In that report, analysts expect AMD to post earnings of $0.09 per share.

  • Business
    CNBC

    Lloyds Bank CEO says he can't rule out further job cuts

    Lloyds Bank CEO tells CNBC at Davos that he cant rule out further job cuts. Horta-Osorio promises to continue to invest in training for jobs of the future. The chief executive of Lloyds Banking Group told CNBC Thursday that he cannot rule out job losses as the bank updates its tech platforms and reviews how it communicates with customers.

  • Can NVIDIA Recover in 2019?
    Business
    Motley Fool

    Can NVIDIA Recover in 2019?

    NVIDIA's forward P/E is also 20, meaning the market doesn't believe the company will grow its earnings at all in the coming year. Has the hate gone too far, and is the current swoon a buying opportunity? A bad crypto hangover NVIDIA's stock is suffering from many of the same headwinds plaguing all semiconductor companies, including a severe slowdown in the Chinese economy and cloud spending due to the U.S.-China trade war.

  • STMicro shares jump on prospects for second half of 2019
    Business
    Reuters

    STMicro shares jump on prospects for second half of 2019

    STMicro was the top performer on France's benchmark stock index CAC 40 as of 0930 GMT, climbing by more than 8 percent and valuing the group at 11.4 billion euros (9.91 billion pounds). Investors also welcomed STMicro's fourth-quarter profitability, which came slightly above expectations despite a slowdown in net revenues. STMicro said it expected first-quarter sales to fall by about 21 percent from the last quarter of 2018, adding to a note of gloom led by Taiwan Semiconductor Manufacturing Co (TSMC), which also cut quarterly sales guidance.

  • PG&E Puts $150 Billion Price Tag on Judge's Aggressive Fire Plan
    Business
    Bloomberg

    PG&E Puts $150 Billion Price Tag on Judge's Aggressive Fire Plan

    California's largest investor-owned utility said U.S. District Judge William Alsup's plan for it to trim branches and inspect and repair thousands of miles of power lines would cost about five times as much as PG&E's forecast liabilities for wildfires that scorched the state in 2017 and 2018 and would have to be funded by ratepayers. His extraordinary safety precautions aren't “feasible” as they would require more than 100 million trees to be removed and more than 650,000 employees to work full time, according to a court filing with PG&E's response Wednesday.

  • Is The St. Joe Company (NYSE:JOE) A Financially Sound Company?
    Business
    Simply Wall St.

    Is The St. Joe Company (NYSE:JOE) A Financially Sound Company?

    Additionally, JOE has generated cash from operations of US$52m over the same time period, leading to an operating cash to total debt ratio of 22%, meaning that JOE's operating cash is sufficient to cover its debt. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In JOE's case, it is able to generate 0.22x cash from its debt capital.

  • Amazon rolls out self-driving 'Scout' delivery robots
    Business
    The Telegraph

    Amazon rolls out self-driving 'Scout' delivery robots

    Amazonis using robots to deliver packages to customers' doors through its Prime service. Six of the cooler-box sized bots this week took to the pavements in Snohomish County, Washington. The autonomous machines are programmed to find their way to customers' addresses, but for now they will be closely monitored by humans, the retail giant said in a blog.

  • How Fixing a Vintage Honda Made Shasta Smith's Career
    News
    WSJ

    How Fixing a Vintage Honda Made Shasta Smith's Career

    Shasta Smith put years into restoring her 1972 Honda, emblazoned with her signature number 5. It inspired a passion for vintage motorcycle restoration that led her to open a repair shop and venue space in Sacramento, Calif. Photo: Ryan Angel Meza for The Wall Street Journal.

  • Canopy Growth Corporation (CGC) Stock Sinks As Market Gains: What You Should Know
    Business
    Zacks

    Canopy Growth Corporation (CGC) Stock Sinks As Market Gains: What You Should Know

    Investors will be hoping for strength from CGC as it approaches its next earnings release, which is expected to be February 14, 2019. On that day, CGC is projected to report earnings of -$0.15 per share, which would represent a year-over-year decline of 36.36%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $75.51 million, up 341.84% from the year-ago period.

  • Vodafone, oil stocks drag FTSE 100 lower for third session
    Business
    Reuters

    Vodafone, oil stocks drag FTSE 100 lower for third session

    Britain's top share index was lower on Thursday, underperforming its European peers, as weaker crude prices dragged oil majors lower and telecom Vodafone and pest control company Rentokil were hurt by weak sector earnings. The FTSE 100 (.FTSE) was 0.1 percent lower at 0939 GMT, on track for its third straight session of losses and its worst weekly performance since December. The FTSE 250 (.FTMC), more domestically focussed, edged higher by 0.1 percent, buoyed by financial stocks that were led by a bounce in Metro Bank after its shares crashed in the previous session.

  • AT&T (T) Outpaces Stock Market Gains: What You Should Know
    Business
    Zacks

    AT&T (T) Outpaces Stock Market Gains: What You Should Know

    Heading into today, shares of the telecommunications company had gained 11.77% over the past month, outpacing the Computer and Technology sector's gain of 7.59% and the S&P 500's gain of 9.27% in that time. Investors will be hoping for strength from T as it approaches its next earnings release, which is expected to be January 30, 2019. On that day, T is projected to report earnings of $0.85 per share, which would represent year-over-year growth of 8.97%.

  • 5 Best Stocks to Buy and Hold for the Long Term
    Business
    InvestorPlace

    5 Best Stocks to Buy and Hold for the Long Term

    One of the core philosophies of Berkshire Hathaway's (NYSE:BRK.A, NYSE:BRK.B) Warren Buffett is the importance of taking a buy-and-hold approach to investing. About long-term stocks, he once famously said: “I never attempt to make money on the stock market. Buffett is worth a staggering $81 billion.

  • Gilead Sciences (GILD) Stock Sinks As Market Gains: What You Should Know
    Business
    Zacks

    Gilead Sciences (GILD) Stock Sinks As Market Gains: What You Should Know

    Meanwhile, our latest consensus estimate is calling for revenue of $5.52 billion, down 7.27% from the prior-year quarter. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability. Research indicates that these estimate revisions are directly correlated with near-term share price momentum.

  • Why New Oriental Education Stock Popped Today
    Business
    Motley Fool

    Why New Oriental Education Stock Popped Today

    More specifically, New Oriental Education's quarterly revenue climbed 27.8% year over year -- or 33.6% computed in Chinese renminbi -- to $597.1 million. New Oriental education added 185 schools and learning centers over the past year, including 24 learning centers and one new training school this quarter, bringing its total to 1,125 at the end of November. "As we execute our well-proven 'Optimize the Market' strategy, we continued to progress our capacity expansion plan in this quarter," stated New Oriental CEO Chenggang Zhou.

  • General Electric (GE) Outpaces Stock Market Gains: What You Should Know
    Business
    Zacks

    General Electric (GE) Outpaces Stock Market Gains: What You Should Know

    Heading into today, shares of the industrial conglomerate had gained 25.15% over the past month, outpacing the Conglomerates sector's gain of 9.09% and the S&P 500's gain of 9.27% in that time. Investors will be hoping for strength from GE as it approaches its next earnings release, which is expected to be January 31, 2019. The company is expected to report EPS of $0.18, down 33.33% from the prior-year quarter.

  • Interactive Brokers Group Hits a Rough Patch
    Business
    Motley Fool

    Interactive Brokers Group Hits a Rough Patch

    Interactive Brokers Group Inc.'s (NYSEMKT: IBKR) earnings can be extremely volatile depending on how market making, stock trading, and a complex currency-diversification strategy goes. The fourth quarter of 2018 was no different, as the core business showed strong fundamentals, but currency trading took a big bite out of earnings. As always, taking a broad, long-term look at the company is what's most important, so let's dive into the numbers.

  • Airbus CEO warns it could move in event of no-deal Brexit
    World
    Associated Press

    Airbus CEO warns it could move in event of no-deal Brexit

    The chief executive of Airbus warned Thursday that the aviation giant could move its U.K. operations out of the country if Britain leaves the European Union without a deal on trade relations. Tom Enders' sharply worded statement comes as business leaders increasingly express their frustration at the lack of progress in securing a Brexit deal ahead of Britain's scheduled March 29 exit from the bloc. U.K. firms are bracing for disruption amid fears that a "no-deal" Brexit will cause economic chaos by eliminating trade agreements and imposing tariffs, customs checks and other barriers between the U.K. and the EU, its biggest trading partner "Please don't listen to the Brexiteers' madness which ...

  • Why Boxlight (BOXL) Stock Is Skyrocketing Today
    Business
    InvestorPlace

    Why Boxlight (BOXL) Stock Is Skyrocketing Today

    The Lawrenceville, Ga.-based company — also known as Boxlight Mimio — announced that it will be sharing the details for three new products at the Bett 2019 event, geared towards helping out the global education market. “Boxlight Mimio has been built around meeting the real needs of teachers and students and this year is no different,” said Mark Elliott, Boxlight's CEO. The Boxlight NDMS (Network Device Management System) provides IT network administrators with centralized control of Boxlight and Mimio interactive displays.

  • Business
    Thomson Reuters StreetEvents

    Edited Transcript of XLNX earnings conference call or presentation 23-Jan-19 10:00pm GMT

    I mean, as we have a big component of our growth is the actual production deployments now we're starting to see with 5G. And because of that and a few other product mixes, that does bring the gross margin down somewhat. I would say what are we doing in terms of driving gross margin? Well, there are a number things that we did, not just for wireless, but in general on what we do to drive our margin, and that ranges on all kinds of cost-saving issues, just disciplined in terms of other things on the business side.