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Is iShares Emerging Markets Dividend ETF (DVYE) a Strong ETF Right Now?

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Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the iShares Emerging Markets Dividend ETF (DVYE - Free Report) is a smart beta exchange traded fund launched on 02/23/2012.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

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.

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.

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.

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 Blackrock. DVYE has been able to amass assets over $646.05 million, making it one of the larger ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the Dow Jones Emerging Markets Select Dividend Index before fees and expenses.

The Dow Jones Emerging Markets Select Dividend Index measures the performance of the companies in emerging market countries that have provided relatively high dividend yields on a consistent basis over time.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.49%, making it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 5.55%.

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, Evraz (EVR - Free Report) accounts for about 2.18% of total assets, followed by Novolipetsk Steel Gdr (NLMK) and Nedbank Group Ltd (NED).

The top 10 holdings account for about 17.96% of total assets under management.

Performance and Risk

The ETF has lost about -6.29% and is down about -0.79% so far this year and in the past one year (as of 12/10/2020), respectively. DVYE has traded between $25.94 and $41.99 during this last 52-week period.

The ETF has a beta of 0.90 and standard deviation of 22.32% for the trailing three-year period, making it a medium risk choice in the space. With about 117 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares 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 - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $64.25 billion in assets, Vanguard FTSE Emerging Markets ETF has $68.38 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.


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