Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the SPDR S&P Emerging Markets Dividend ETF (EDIV) is a smart beta exchange traded fund launched on 02/23/2011.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
EDIV is managed by State Street Global Advisors, and this fund has amassed over $535.83 M, which makes 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
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 this ETF are 0.49%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, China Mobile Limited (941-HK) accounts for about 2.72% of total assets, followed by Public Joint-Stock Company Gazprom Sponsored Adr (OGZPY) and Ultrapar Participacoes S.a. (UGPA3-BR).
The top 10 holdings account for about 20.93% of total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Emerging Markets Dividend ETF has added roughly 7.17% so far, and is down about -7.60% over the last 12 months (as of 01/30/2019). EDIV has traded between $27.94 and $36.54 in this past 52-week period.
The ETF has a beta of 0.83 and standard deviation of 18.24% for the trailing three-year period, making it a medium risk choice in the space. With about 139 holdings, it effectively diversifies company-specific risk.
SPDR S&P 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 $55.91 B in assets, Vanguard FTSE Emerging Markets ETF has $58.78 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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Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
Gazprom OAO (OGZPY) : Free Stock Analysis Report
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
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