“It helped in the down markets of 2008 and 2011 in emerging markets, which earned some of the relative performance advantage,” Schwartz said.
Secret weapon: June rebalance
DEM underwent the annual rebalance last month.
Schwartz said the ETF sells stocks that have appreciated and buys stocks that have fallen. The reshuffle also acts to lower the average price-to-earnings ratio (P/E) of the portfolio holdings.
In terms of individual countries, the June rebalance resulted in DEM boosting its allocation to China and Russia, two beaten-down markets. The fund currently has 21.2% in Taiwan, 14.2% in Brazil, 14.2% in China and 13.8% in Russia.
In sectors, the ETF bought materials and energy stocks in the rebalance, which hunts for cheap sectors.
DEM does not hedge its exposure to emerging market currencies, which weighed on performance the past year as the dollar strengthened.
The ETF will shortly release five-year performance data as it launched in July 2007. It holds $3.8 billion in assets.
The fund’s tracking index has been less volatile than market-cap weighted emerging market benchmarks over the past five years. The WidsomTree Emerging Markets Equity Income Index has a five-year beta of 0.8 versus the MSCI Emerging Market Index.
Other emerging market dividend ETFs include SPDR S&P Emerging Markets Dividend (NYSEArca: EDIV), EGShares Low Volatility Emerging Markets Dividend ETF (NYSEArca: HILO) and iShares Emerging Markets Dividend (NYSEArca: DVYE).
iShares MSCI Emerging Markets
