The SPDR SP Emerging Markets Dividend ETF (EDIV) was launched on 02/23/2011, and is a smart beta exchange traded fund designed to offer broad exposure to the Broad Emerging Market ETFs category of the market.
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.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by State Street (NYSE:STT) Global Advisors, and has been able to amass over $273.06 million, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. EDIV, before fees and expenses, seeks to match the performance of the S&P Emerging Markets Dividend Opportunities Index.
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%.
The fund has a 12-month trailing dividend yield of 3.68%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Formosa Plastics Corporation (1301-TW) accounts for about 3.11% of the fund's total assets, followed by Pegatron Corporation (4938-TW) and Wal-Mart (NYSE:WMT) De Mexico Sab De Cv (WALMEX-MX).
EDIV's top 10 holdings account for about 26.16% of its total assets under management.
Performance and Risk
Year-to-date, the SPDR SP Emerging Markets Dividend ETF has lost about -14.19% so far, and is down about -11.33% over the last 12 months (as of 11/12/2020). EDIV has traded between $19.98 and $32.48 in this past 52-week period.
The fund has a beta of 0.79 and standard deviation of 23.22% for the trailing three-year period, which makes EDIV a medium risk choice in this particular space. With about 129 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR SP 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.
IShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $59.53 billion in assets, Vanguard FTSE Emerging Markets ETF has $65.56 billion. IEMG has an expense ratio of 0.13% and VWO charges 0.10%.
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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SPDR SP Emerging Markets Dividend ETF (EDIV): ETF Research Reports
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
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