The iShares Emerging Markets Dividend ETF (DVYE) was launched on 02/23/2012, 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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
Because the fund has amassed over $662.69 million, this makes it one of the larger ETFs in the Broad Emerging Market ETFs. DVYE is managed by Blackrock (NYSE:BLK). Before fees and expenses, DVYE 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
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.
Annual operating expenses for DVYE are 0.49%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 5.27%.
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.
When you look at individual holdings, Evraz (EVR) accounts for about 2.18% of the fund's total assets, followed by Novolipetsk Steel Gdr (NLMK) and Nedbank Group Ltd (NED).
Its top 10 holdings account for approximately 17.96% of DVYE's total assets under management.
Performance and Risk
So far this year, DVYE has added roughly 0%, and is down about -3.51% in the last one year (as of 01/01/2021). During this past 52-week period, the fund has traded between $25.94 and $41.99.
The fund has a beta of 0.91 and standard deviation of 22.40% for the trailing three-year period, which makes DVYE a medium risk choice in this particular space. With about 117 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares 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 $68.64 billion in assets, Vanguard FTSE Emerging Markets ETF has $70.01 billion. IEMG has an expense ratio of 0.11% 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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iShares Emerging Markets Dividend ETF (DVYE): ETF Research Reports
Evercore Inc (EVR): Free Stock Analysis Report
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
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