Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the SPDR SP Emerging Markets Dividend ETF (EDIV) is a smart beta exchange traded fund launched on 02/23/2011.
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.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by State Street Global Advisors, EDIV has amassed assets over $243.26 million, making it one of the average sized ETFs in the Broad Emerging Market ETFs. This particular fund 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
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 EDIV are 0.49%, which makes it on par with most peer products in the space.
EDIV's 12-month trailing dividend yield is 5.50%.
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.
Taking into account individual holdings, Hengan International Group Co. Ltd. (1044-HK) accounts for about 4.43% of the fund's total assets, followed by China Resources Land Limited (1109-HK) and China Mobile Limited (941-HK).
EDIV's top 10 holdings account for about 32.76% of its total assets under management.
Performance and Risk
So far this year, EDIV has lost about -25.62%, and is down about -22.79% in the last one year (as of 05/18/2020). During this past 52-week period, the fund has traded between $19.98 and $33.14.
EDIV has a beta of 0.88 and standard deviation of 22.25% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 131 holdings, it effectively diversifies company-specific risk.
SPDR SP 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 A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $44.86 billion in assets, Vanguard FTSE Emerging Markets ETF has $50.90 billion. IEMG has an expense ratio of 0.13% and VWO charges 0.10%.
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 SP Emerging Markets Dividend ETF (EDIV): ETF Research Reports
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
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