ETF Spotlight: Emerging Market Dividends
May 17th 2012 at 7:30am by Tom Lydon
ETF Spotlight on WisdomTree Emerging Markets Equity Income Fund (NYSEArca: DEM), part of an ongoing series.
Assets: $3.61 million.
Objective: The WisdomTree Emerging Markets Equity Income Fund tries to reflect the performance of the WisdomTree Emerging Markets Equity Income Index, which is a fundamentally weighted index that allocates based on annual cash dividends paid and tracks the highest dividend yielding stocks from emerging markets.
Holdings: Top holdings include: Taiwan Semiconductor Manufacturer 4.5%, Ci de Bebidas das Americas 3.4%, Malayan Banking 2.4%, Banco Santander Brasil 2.3% and Kumba Iron Ore 2.2%.
What You Should Know:
- WisdomTree sponsors the fund.
- DEM has an expense ratio of 0.63%.
- The fund holds 284 securities and the top ten make up 25.2% of the overall portfolio.
- Sector allocations include: financials 25.1%, telecom services 20.8%, information technology 14.8%, utilities 10.3%, materials 8.8%, consumer staples 7.8%, industrials 5.1%, consumer discretionary 3.9% and energy 2.8%.
- Sector allocations include: Taiwan 22.9%, Brazil 20.0%, South Africa 9.8%, Malaysia 9.6%, Chile 5.3%, Thailand 4.6%, South Korea 4.0%, Turkey 3.6%, Czech Republic 3.1%, China 3.0%, Israel 3.0%, Philippines 2.5%, Poland 2.3%, Indonesia 2.0%, Mexico 1.9%, Russia 1.4%, Argentina 0.3% and Hungary 0.3%.
- DEM has a 30-day SEC yield of 6.43%.
- The ETF is down 5.9% over the last month, down 6.9% over the last three months but up 3.6% year-to-date.
- “Since this fund’s mid-2007 inception, it has earned higher absolute and risk-adjusted returns than the market-weighted MSCI Emerging Markets Index,” according to Morningstar analyst Patricia Oey. “This outperformance, combined with DEM’s relatively lower volatility, suggests that a dividend-focused strategy is an attractive way to gain access to the emerging markets.”
- “Emerging markets are expected to show stronger earnings growth, as well as faster dividend growth, relative to the developed world, in the near and medium term,” Oey added.
The Latest News:
- Emerging market equities declined to a four month low last week as the deepening Eurozone crisis and slower Chinese growth weighed on global stocks, Bloomberg reports.
- Greece will hold new elections after the government failed to form a new ruling coalition, threatening cuts needed to secure another bailout and stoking speculation of the country exiting the euro.
- Chinese banks and homebuilders weakened as net lending in the country’s four biggest banks was close to zero at the beginning of May.
- “Investors are going defensive with cash and fixed-income assets because they are worried about the situation in Europe and China,” Paul Joseph Garcia, manager at the Bank of the Philippine Islands, said in the report. “There are fears that Greece will not uphold its bailout plan and China is in for a hard landing.”
WisdomTree Emerging Markets High-Yield Fund
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.