Dividend-themed ETFs for emerging markets have yet to achieve the popularity of their cousins that invest in U.S. stocks even though some analysts think the strategy is just as applicable to developing markets.
“Most analysts acknowledge that over any length of time — short-, medium, or long-term — emerging market corporations will grow both their earnings and their dividends at a faster pace than developed world companies. And yet, emerging market dividend funds are not currently competitive with U.S. dividend funds nor the broader emerging market benchmarks,” writes Gary Gordon at ETF Expert.
“So what should one think about the underachievement in the emerging market dividend space? Is it merely a matter of patience? Or are these ETFs tracking unreliable indices with questionable risk-reward benefits?” he wrote. [Dividend ETF’s Strategy Paying Off in Emerging Markets]
Emerging market dividend ETFs include: WisdomTree Emerging Markets Equity Income (NYSEArca: DEM), SPDR S&P Emerging Markets Dividend (NYSEArca: EDIV), EGShares Low Volatility Emerging Markets Dividend ETF (NYSEArca: HILO) and iShares Emerging Markets Dividend Fund (NYSEArca: DVYE). [ETF Chart of the Day: Emerging Market Dividends]
DEM is the largest of the bunch with $4.1 billion in assets under management. The ETF has an SEC 30-day yield of 3%, according to manager WisdomTree.
DEM is up 6.9% year to date, compared with a gain of 8.7% for iShares MSCI Emerging Markets (NYSEArca: EEM).