Investors piled into dividend exchange traded funds last year, but the trend has started to wane with the S&P 500 enjoying a solid start to 2012.
Among dividend ETFs, the best performer so far this year may not be the most obvious candidate.
“In aggregate, equity funds suffered net redemptions in 2011, but investors didn’t shun those focused on dividends, which enjoyed roughly $3 billion in inflows. Dividend-oriented exchange-traded funds took in a much bigger $14.3 billion haul. Predictably, fund firms launched new offerings to take advantage of the trend, and some already-existing funds became more income-oriented,” wrote Christopher Davis for a Morningstar article.
In total, fund providers launched about 16 new dividend focused ETFs in 2011.
The best performer in 2012 is Guggenheim ABC High Dividend ETF (NYSEArca: ABCS), reports Christopher Magoon for Seeking Alpha. The fund tracks three international markets: Australia, Brazil and Canada. [ETF Spotlight: SPDR S&P Emerging Market Dividend]
While the dividend yield is not remarkable, the sector weighting may have something to do with the stellar performance. The ETF avoids heavy exposure to financials and focuses in on utilities and the energy sector, followed by consumer discretionary. [Emerging Market Dividend ETFs Grab Market Share]
The three countries that are represented are all commodity-rich and are markets that investors gravitate toward. [Best Emerging Market ETFs]
The top dividend ETFs year-to-date, after ABCS:
- SPDR S&P Emerging Markets Dividend (NYSEArca: EDIV)
- EG Shares Low Volatility Emerging Markets Dividend ETF (NYSEArca: HILO)
- WisdomTree Emerging Markets Equity Income (NYSEArca: DEM)
- WisdomTree Australia Dividend Fund (NYSEArca: AUSE)
Guggenheim ABC High Dividend ETF
Tisha Guerrero contributed to this article.