Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the iShares Emerging Markets Dividend ETF (
DVYE Quick Quote DVYE - Free Report) is a smart beta exchange traded fund launched on 02/23/2012. 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.
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.
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.
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.
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
Because the fund has amassed over $707.39 million, this makes it one of the larger ETFs in the Broad Emerging Market ETFs. DVYE is managed by Blackrock. Before fees and expenses, DVYE seeks to match the performance of the Dow Jones Emerging Markets Select Dividend Index.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.49% for DVYE, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 5.17%.
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 Quick Quote 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
Year-to-date, the iShares Emerging Markets Dividend ETF has gained about 1.99% so far, and is down about -3.20% over the last 12 months (as of 01/25/2021). DVYE has traded between $25.94 and $39.88 in this past 52-week period.
DVYE has a beta of 0.91 and standard deviation of 22.42% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 117 holdings, it effectively diversifies company-specific risk.
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.
Vanguard FTSE Emerging Markets ETF (
VWO Quick Quote VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF ( IEMG Quick Quote IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $77.02 billion in assets, iShares Core MSCI Emerging Markets ETF has $77.21 billion. VWO has an expense ratio of 0.10% and IEMG charges 0.11%.
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.