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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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
The fund is managed by Blackrock. DVYE has been able to amass assets over $660.80 M, making it one of the larger ETFs in the Broad Emerging Market ETFs. Before fees and expenses, this particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.49% for this ETF, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 5.16%.
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.
Taking into account individual holdings, Farglory Land Development Ltd accounts for about 2.14% of the fund's total assets, followed by Severstal (CHMF) and Seaspan Corp (SSW - Free Report) .
The top 10 holdings account for about 18.85% of total assets under management.
Performance and Risk
The ETF has gained about 10.34% so far this year and is down about -1.32% in the last one year (as of 02/21/2019). In the past 52-week period, it has traded between $36.59 and $45.23.
DVYE has a beta of 0.81 and standard deviation of 16.33% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 131 holdings, it effectively diversifies company-specific risk.
IShares 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.
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 An Inclusion Index. IShares Core MSCI Emerging Markets ETF has $58.52 B in assets, Vanguard FTSE Emerging Markets ETF has $60.48 B. IEMG has an expense ratio of 0.14% and VWO charges 0.14%.
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.