WisdomTree Investments, the company behind the blockbuster DXJ, today is launching an emerging markets ETF targeting “dividend growth”—an area the company has concentrated on this year as it seeks to build out its offerings of equity strategies focused on payouts.
The rollout of the WisdomTree Emerging Markets Dividend Growth Fund (DGRE) follows the launches of two similar funds that target U.S. stocks—the WisdomTree U.S. Dividend Growth Fund (DGRW) and the WisdomTree U.S. SmallCap Dividend Growth Fund (DGRS).
The new ETF has an annual expense ratio of 0.63 percent, or $63 for each $10,000 invested. That’s more than its two U.S. counterparts—the broadly focused DGRW costs 0.28 percent , while its small-cap counterpart, DGRS, costs 0.38 percent .
“In contrast to many popular emerging-markets equity strategies, DGRE has heavy exposure to the consumer sectors (staples and discretionary)—which tend to be more closely tied to the economic growth potential of domestic markets, as well as defensive sectors, which have historically lower volatility,” WisdomTree Director of Research Jeremy Schwartz said in a press release.
“Moreover, DGRE is underweight the ‘BRIC’ countries—Brazil, Russia, India, China—and holds some of its largest weights in the ‘MIT’ countries—Mexico, Indonesia and Thailand—again, which differs from traditional, comparable investments,” Schwartz added, touching on a new theme in investment markets regarding the new face of developing-markets investing.
The rollout of yet another a payout-focused fund is also the latest example of how fund sponsors are looking to feed a big and growing appetite among investors for income-generating investments. In the era of ultra-low bond yields that has followed the crash of 2008, dividend-paying equity funds look particularly appetizing, particularly as bond yields start to normalize.
The new emerging markets dividend growth fund DGRE will target 17 developing countries using representative sampling, meaning it won’t own all the securities in the index. Those countries are:Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia, Korea, Malaysia, Mexico, the Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey, according to a recent regulatory filing.
One of WisdomTree’s first dividend-focused strategies targeting the emerging markets, the WisdomTree Emerging Markets Equity Income Fund (DEM), currently has $4.83 billion in assets under management.
Since last autumn, WisdomTree has been in the headlines in connection with its blockbuster Japan-focused fund, the WisdomTree Japan Hedged Equity Fund (DXJ), which is the most popular ETF of 2013. It has hauled in $9 billion this year, and has total assets of $10.67 billion, according to data compiled by IndexUniverse.
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