A smart beta exchange traded fund, the iShares Emerging Markets Dividend ETF (
DVYE Quick Quote DVYE - Free Report) debuted on 02/23/2012, and offers broad exposure to the Broad Emerging Market ETFs category of the market. What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
DVYE is managed by Blackrock, and this fund has amassed over $848.94 million, which makes it one of the larger ETFs in the Broad Emerging Market ETFs. DVYE, before fees and expenses, 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
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 DVYE are 0.49%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 4.78%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Taking into account individual holdings, Evraz (
EVR Quick Quote EVR - Free Report) accounts for about 3.02% of the fund's total assets, followed by Novolipetsk Steel Gdr (NLMK) and Indiabulls Housing Finance Ltd (IBULHSGFIN).
DVYE's top 10 holdings account for about 19.57% of its total assets under management.
Performance and Risk
The ETF has gained about 8.23% and is up roughly 41.94% so far this year and in the past one year (as of 04/27/2021), respectively. DVYE has traded between $29.42 and $40.29 during this last 52-week period.
The ETF has a beta of 0.89 and standard deviation of 22.10% for the trailing three-year period, making it a medium risk choice in the space. With about 116 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 $80.84 billion in assets, iShares Core MSCI Emerging Markets ETF has $81.01 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.