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Is SPDR S&P Emerging Markets Dividend ETF (EDIV) a Strong ETF Right Now?
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Making its debut on 02/23/2011, smart beta exchange traded fund SPDR S&P Emerging Markets Dividend ETF (EDIV - Free Report) provides investors 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.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
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
EDIV is managed by State Street Global Advisors, and this fund has amassed over $299.10 million, which makes 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.49%.
It's 12-month trailing dividend yield comes in at 3.35%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Formosa Plastics Corporation (1301-TW) accounts for about 3.35% of total assets, followed by Fomento Economico Mexicano Sab De Cv Sponsored Adr Class B (FMX - Free Report) and Lenovo Group Limited (992-HK).
Its top 10 holdings account for approximately 27.48% of EDIV's total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Emerging Markets Dividend ETF has gained about 5.19% so far, and is down about -0.86% over the last 12 months (as of 02/11/2021). EDIV has traded between $19.98 and $31.05 in this past 52-week period.
The fund has a beta of 0.81 and standard deviation of 23.04% for the trailing three-year period, which makes EDIV a medium risk choice in this particular space. With about 128 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 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.
Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $79.17 billion in assets, iShares Core MSCI Emerging Markets ETF has $79.38 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.
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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Is SPDR S&P Emerging Markets Dividend ETF (EDIV) a Strong ETF Right Now?
Making its debut on 02/23/2011, smart beta exchange traded fund SPDR S&P Emerging Markets Dividend ETF (EDIV - Free Report) provides investors 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.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
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
EDIV is managed by State Street Global Advisors, and this fund has amassed over $299.10 million, which makes 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.49%.
It's 12-month trailing dividend yield comes in at 3.35%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Formosa Plastics Corporation (1301-TW) accounts for about 3.35% of total assets, followed by Fomento Economico Mexicano Sab De Cv Sponsored Adr Class B (FMX - Free Report) and Lenovo Group Limited (992-HK).
Its top 10 holdings account for approximately 27.48% of EDIV's total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Emerging Markets Dividend ETF has gained about 5.19% so far, and is down about -0.86% over the last 12 months (as of 02/11/2021). EDIV has traded between $19.98 and $31.05 in this past 52-week period.
The fund has a beta of 0.81 and standard deviation of 23.04% for the trailing three-year period, which makes EDIV a medium risk choice in this particular space. With about 128 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 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.
Vanguard FTSE Emerging Markets ETF (VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $79.17 billion in assets, iShares Core MSCI Emerging Markets ETF has $79.38 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.
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.