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?
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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
The fund is managed by State Street Global Advisors. EDIV has been able to amass assets over $457.81 M, making it one of the larger ETFs in the Broad Emerging Market ETFs. EDIV seeks to match the performance of the S&P Emerging Markets Dividend Opportunities Index before fees and expenses.
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
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.
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 3.19%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Ptt Global Chemical Plc Nvdr (PTTGC.R-TH) accounts for about 2.82% of total assets, followed by China Mobile Limited (941-HK) and Taiwan Semiconductor Manufacturing Co. Ltd. Sponsored Adr (TSM).
Its top 10 holdings account for approximately 25.08% of EDIV's total assets under management.
Performance and Risk
The ETF return is roughly 8.43% and is down about -3.46% so far this year and in the past one year (as of 04/09/2019), respectively. EDIV has traded between $27.94 and $35.42 during this last 52-week period.
The fund has a beta of 0.81 and standard deviation of 17.56% for the trailing three-year period, which makes EDIV a medium risk choice in this particular space. With about 134 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 An Inclusion Index. IShares Core MSCI Emerging Markets ETF has $61.16 B in assets, Vanguard FTSE Emerging Markets ETF has $65.89 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.
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
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
To read this article on Zacks.com click here.
Zacks Investment Research