The iShares Emerging Markets Dividend ETF (DVYE) made its debut on 02/23/2012, and is a smart beta exchange traded fund that provides broad exposure to the Broad Emerging Market ETFs category of the U.S. equity 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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
Because the fund has amassed over $444.28 M, this makes it one of the larger ETFs in the Broad Emerging Market ETFs. DVYE is managed by Blackrock. This particular fund, before fees and expenses, seeks to match the performance of the Dow Jones Emerging Markets Select Dividend Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.49% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 5.02%.
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, Severstal (CHMF) accounts for about 2.03% of the fund's total assets, followed by Seaspan Corp (SSW) and Barwa Real Estate Co. Q.s.c. (BRES).
DVYE's top 10 holdings account for about 17.51% of its total assets under management.
Performance and Risk
So far this year, the ETF has lost about -2.18%, and it's up approximately 7.21% in the last one year (as of 05/10/2018). DVYE has traded between $39.41 and $46.10 in the past 52-week period.
The ETF has a beta of 0.94 and standard deviation of 18.55% for the trailing three-year period, making it 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 $49.96 B in assets, Vanguard FTSE Emerging Markets ETF has $66.84 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.
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Seaspan Corporation (SSW) : Free Stock Analysis Report
VANGD-FTSE EM (VWO): ETF Research Reports
ISHARS-EM DIV (DVYE): ETF Research Reports
ISHARS-CR MS EM (IEMG): ETF Research Reports
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