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?
The SPDR S&P Emerging Markets Dividend ETF (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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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 sponsored by State Street Global Advisors. It has amassed assets over $214.12 million, making it one of the average sized ETFs in the Broad Emerging Market ETFs. Before fees and expenses, EDIV seeks to match the performance of the S&P Emerging Markets Dividend Opportunities Index.
The S&P Emerging Markets Dividend Opportunities Index includes 100 tradable, exchange-listed common stocks from emerging market countries that offer high dividend yields.
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.
EDIV's 12-month trailing dividend yield is 4.40%.
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, Haci Omer Sabanci Holding A.s. (SAHOL.E-TR) accounts for about 3.83% of the fund's total assets, followed by Wal-Mart De Mexico Sab De Cv (WALMEX-MX) and First Abu Dhabi Bank P.j.s.c. (FAB-AE).
EDIV's top 10 holdings account for about 28.01% of its total assets under management.
Performance and Risk
Year-to-date, the SPDR S&P Emerging Markets Dividend ETF has lost about -13.55% so far, and is down about -9.70% over the last 12 months (as of 07/26/2022). EDIV has traded between $24.85 and $31.73 in this past 52-week period.
The ETF has a beta of 0.68 and standard deviation of 21.68% for the trailing three-year period, making it a medium risk choice in the space. With about 121 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 (ETF:VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $64.85 billion in assets, Vanguard FTSE Emerging Markets ETF has $70.16 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.
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