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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
Because the fund has amassed over $408.70 M, this makes it one of the average sized ETFs in the Broad Emerging Market ETFs. DVYE is managed by Blackrock. DVYE 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for DVYE are 0.49%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 5.11%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Taking into account individual holdings, Seaspan Corp (SSW) accounts for about 2.19% of the fund's total assets, followed by Severstal (CHMF) and Barwa Real Estate Co. Q.s.c. (BRES).
The top 10 holdings account for about 18.35% of total assets under management.
Performance and Risk
DVYE has lost about -3.54% so far this year, and as of 07/20/2018, was up about 0.31% in the last one year. In the past 52-week period, the fund has traded between $38.66 and $46.10.
DVYE has a beta of 0.93 and standard deviation of 18.33% for the trailing three-year period, which makes the fund a medium choice in the 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 An Inclusion Index. IShares Core MSCI Emerging Markets ETF has $46.56 B in assets, Vanguard FTSE Emerging Markets ETF has $60.66 B. IEMG has an expense ratio of 0.14% and VWO charges 0.14%.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ISHARS-EM DIV (DVYE): ETF Research Reports
Seaspan Corporation (SSW) : Free Stock Analysis Report
VANGD-FTSE EM (VWO): ETF Research Reports
ISHARS-CR MS EM (IEMG): ETF Research Reports
To read this article on Zacks.com click here.
Zacks Investment Research