The SPDR S&P Emerging Markets Dividend ETF (EDIV) made its debut on 02/23/2011, and is a smart beta exchange traded fund that provides 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.
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.
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.
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.
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
The fund is sponsored by State Street Global Advisors. It has amassed assets over $438.84 M, making it one of the larger ETFs in the Broad Emerging Market ETFs. Before fees and expenses, EDIV seeks to match the performance of the S&P Emerging Markets Dividend Opportunities Index.
This Index generally includes 100 tradable, exchange-listed common stocks from emerging market countries that offer high dividend yields. Additionally, stocks must have positive 3-year earnings growth and profitability. Stocks are weighted by annual dividend yield. To ensure diverse exposure, no single country or sector has more than a 25% weight and no single stock has more than a 3% weight.
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.
Operating expenses on an annual basis are 0.49% for EDIV, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.50%.
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.
Looking at individual holdings, Gazprom Pjsc Sponsored Adr (OGZPY) accounts for about 3.40% of total assets, followed by Taiwan Semiconductor Manufacturing Co. Ltd. Sponsored Adr (TSM) and Ptt Public Co. Ltd. Nvdr (PTT.R-TH).
EDIV's top 10 holdings account for about 26.3% of its total assets under management.
Performance and Risk
The ETF return is roughly 8.41% so far this year and is up about 1.96% in the last one year (as of 08/01/2019). In the past 52-week period, it has traded between $27.94 and $33.14.
The fund has a beta of 0.78 and standard deviation of 16.54% for the trailing three-year period, which makes EDIV a medium risk choice in this particular space. With about 131 holdings, it effectively diversifies company-specific risk.
SPDR S&P 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 $57.48 B in assets, Vanguard FTSE Emerging Markets ETF has $62.75 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.
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SPDR S&P Emerging Markets Dividend ETF (EDIV): ETF Research Reports
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
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