Of course, country weights explain part of IDLV’s dividend advantage. The ETF’s largest country weight is 25.9% to Canada and six of the ETF’s top-10 holdings are Canadian banks. Canadian banks have solid performers this year and in most cases, feature better yields and steadier dividend growth than their U.S. counterparts.
The U.K. and Australia, two of the largest ex-U.S. developed markets dividend destinations, combine for 23% of IDLV’s weight. [Lovely Australian Dividends]
“The price return ratio spread between the S&P 500 Index and MSCI EAFE Index is flirting with highs last seen in 1971 and 2000, and is moving toward the upper end of the range seen since 1970. Normalization in the spread relationship could suggest stronger relative performance for the MSCI EAFE Index,” according to Invesco.
That could indicate IDLV is heading toward a period of out-performance over U.S. stocks, particularly if investors seek dividend and low volatility advantages.
PowerShares S&P International Developed Low Volatility Portfolio
Tom Lydon’s clients own shares of EFA.