Is SPDR S&P Emerging Markets Dividend ETF (EDIV) a Strong ETF Right Now?

The SPDR S&P 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?

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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

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.

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.

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

EDIV is managed by State Street Global Advisors, and this fund has amassed over $403.79 M, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. Before fees and expenses, this particular fund 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

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

Annual operating expenses for this ETF are 0.49%, making it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 4.10%.

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.

When you look at individual holdings, China Resources Land Limited (1109-HK) accounts for about 3.28% of the fund's total assets, followed by Ptt Global Chemical Plc Nvdr (PTTGC.R-TH) and Hengan International Group Co. Ltd. (1044-HK).

Its top 10 holdings account for approximately 29.7% of EDIV's total assets under management.

Performance and Risk

Year-to-date, the SPDR S&P Emerging Markets Dividend ETF has lost about -6.73% so far, and is down about -2.66% over the last 12 months (as of 02/21/2020). EDIV has traded between $28.88 and $33.14 in this past 52-week period.

The fund has a beta of 0.80 and standard deviation of 16.02% for the trailing three-year period, which makes EDIV a medium risk choice in this particular space. With about 132 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.

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 $60.50 B in assets, Vanguard FTSE Emerging Markets ETF has $65.48 B. IEMG has an expense ratio of 0.14% and VWO charges 0.12%.

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 S&P 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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