A smart beta exchange traded fund, the iShares Emerging Markets Dividend ETF (DVYE) debuted on 02/23/2012, and offers broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Blackrock, DVYE has amassed assets over $747.08 M, making it one of the larger ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the Dow Jones Emerging Markets Select Dividend Index before fees and expenses.
The Dow Jones Emerging Markets Select Dividend Index measures the performance of the companies in emerging market countries that have provided relatively high dividend yields on a consistent basis over time.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.49% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 6.16%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
When you look at individual holdings, Astral Foods Ltd (ARL) accounts for about 2.34% of the fund's total assets, followed by Nanya Technology Corp and Severstal (CHMF).
The top 10 holdings account for about 20.01% of total assets under management.
Performance and Risk
Year-to-date, the iShares Emerging Markets Dividend ETF has lost about -3.20% so far, and is up roughly 1.69% over the last 12 months (as of 02/20/2020). DVYE has traded between $36.90 and $41.99 in this past 52-week period.
The fund has a beta of 0.81 and standard deviation of 13.87% for the trailing three-year period, which makes DVYE a medium risk choice in this particular space. With about 120 holdings, it effectively diversifies company-specific risk.
IShares Emerging Markets Dividend ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $61.44 B in assets, Vanguard FTSE Emerging Markets ETF has $66.38 B. IEMG has an expense ratio of 0.14% and VWO charges 0.12%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
Click to get this free report iShares Emerging Markets Dividend ETF (DVYE): ETF Research Reports iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research