Designed to provide broad exposure to the Broad Emerging Market ETFs category of the market, the SPDR S&P Emerging Markets Dividend ETF (EDIV) is a smart beta exchange traded fund launched on 02/23/2011.
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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
The fund is managed by State Street (NYSE:STT) Global Advisors, and has been able to amass over $315.74 million, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. EDIV seeks to match the performance of the S&P Emerging Markets Dividend Opportunities Index before fees and expenses.
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.49%.
It's 12-month trailing dividend yield comes in at 2.93%.
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.
Looking at individual holdings, Chung-Hsin Electric & Machinery Manufacturing Corp. (1513-TW) accounts for about 3.43% of total assets, followed by Power Grid Corporation Of India Limited (532898-IN) and China Vanke Co. Ltd Class H (2202-HK).
EDIV's top 10 holdings account for about 27.06% of its total assets under management.
Performance and Risk
So far this year, EDIV has added roughly 9.83%, and it's up approximately 21.35% in the last one year (as of 06/21/2021). During this past 52-week period, the fund has traded between $23.73 and $31.46.
The fund has a beta of 0.77 and standard deviation of 22.69% for the trailing three-year period, which makes EDIV a medium risk choice in this particular space. With about 127 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 $81.99 billion in assets, Vanguard FTSE Emerging Markets ETF has $82.35 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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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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