A smart beta exchange traded fund, the SPDR SP Emerging Markets Dividend ETF (EDIV) debuted on 02/23/2011, and offers broad exposure to the Broad Emerging Market ETFs category of the market.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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
The fund is managed by State Street Global Advisors. EDIV has been able to amass assets over $253.16 million, making it one of the average sized 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.49%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.06%.
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.
Taking into account individual holdings, Power Grid Corporation Of India Limited (532898-IN) accounts for about 3.13% of the fund's total assets, followed by Advanced Info Service Public Co. Ltd. Nvdr (ADVANC.R-TH) and Itc Limited (500875-IN).
EDIV's top 10 holdings account for about 26.08% of its total assets under management.
Performance and Risk
The ETF has lost about -22.07% so far this year and is down about -15.75% in the last one year (as of 09/29/2020). In the past 52-week period, it has traded between $19.98 and $32.48.
The ETF has a beta of 0.81 and standard deviation of 23.11% for the trailing three-year period, making it a medium risk choice in the space. With about 130 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR SP 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 $53.10 billion in assets, Vanguard FTSE Emerging Markets ETF has $59.52 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.
Bottom Line
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.
Image: Bigstock
Is SPDR SP Emerging Markets Dividend ETF (EDIV) a Strong ETF Right Now?
A smart beta exchange traded fund, the SPDR SP Emerging Markets Dividend ETF (EDIV) debuted on 02/23/2011, and offers broad exposure to the Broad Emerging Market ETFs category of the market.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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
The fund is managed by State Street Global Advisors. EDIV has been able to amass assets over $253.16 million, making it one of the average sized 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.49%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.06%.
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.
Taking into account individual holdings, Power Grid Corporation Of India Limited (532898-IN) accounts for about 3.13% of the fund's total assets, followed by Advanced Info Service Public Co. Ltd. Nvdr (ADVANC.R-TH) and Itc Limited (500875-IN).
EDIV's top 10 holdings account for about 26.08% of its total assets under management.
Performance and Risk
The ETF has lost about -22.07% so far this year and is down about -15.75% in the last one year (as of 09/29/2020). In the past 52-week period, it has traded between $19.98 and $32.48.
The ETF has a beta of 0.81 and standard deviation of 23.11% for the trailing three-year period, making it a medium risk choice in the space. With about 130 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR SP 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 $53.10 billion in assets, Vanguard FTSE Emerging Markets ETF has $59.52 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.
Bottom Line
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.