Is iShares Emerging Markets Dividend ETF (DVYE) a Strong ETF Right Now?
Making its debut on 02/23/2012, smart beta exchange traded fund iShares Emerging Markets Dividend ETF (DVYE) provides investors broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Blackrock. DVYE has been able to amass assets over $752.02 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for DVYE are 0.49%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 6.12%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Astral Foods Ltd (ARL) accounts for about 2.34% of total assets, followed by Nanya Technology Corp and Severstal (CHMF).
Its top 10 holdings account for approximately 20.01% of DVYE's total assets under management.
Performance and Risk
The ETF has lost about -2.56% and is up about 2.40% so far this year and in the past one year (as of 01/28/2020), respectively. DVYE has traded between $36.90 and $42.09 during this last 52-week period.
The fund has a beta of 0.78 and standard deviation of 13.65% 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.
Alternatives
IShares Emerging Markets Dividend ETF is not a suitable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $60.22 B in assets, Vanguard FTSE Emerging Markets ETF has $64.67 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.
Bottom Line
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.
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iShares Emerging Markets Dividend ETF (DVYE): ETF Research Reports
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
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