Making its debut on 07/13/2007, smart beta exchange traded fund WisdomTree Emerging Markets High Dividend ETF (
DEM Quick Quote DEM - Free Report) provides investors broad exposure to the Broad Emerging Market ETFs category of the market. What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
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
Managed by Wisdomtree, DEM has amassed assets over $1.72 billion, making it one of the larger ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the WisdomTree Emerging Markets High Dividend Index before fees and expenses.
The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of the highest dividend yielding stocks selected from the WisdomTree Emerging Markets Dividend Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.63%.
DEM's 12-month trailing dividend yield is 9.44%.
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.
When you look at individual holdings, Vale Sa (VALE3) accounts for about 9.03% of the fund's total assets, followed by Petroleo Brasileiro Sa (PETR3) and China Construction Bank Corp H.
Performance and Risk
The ETF has lost about -11.55% so far this year and is down about -8.52% in the last one year (as of 11/28/2022). In the past 52-week period, it has traded between $32.14 and $47.47.
The ETF has a beta of 0.71 and standard deviation of 23.23% for the trailing three-year period, making it a medium risk choice in the space. With about 486 holdings, it effectively diversifies company-specific risk.
WisdomTree Emerging Markets High 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 Quick Quote IEMG - Free Report) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF ( VWO Quick Quote VWO - Free Report) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $62.54 billion in assets, Vanguard FTSE Emerging Markets ETF has $66.74 billion. IEMG has an expense ratio of 0.09% and VWO charges 0.08%.
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.