Equally as important as the countries that EMHD is heavily allocated are the countries that do not occupy big spots in the fund, namely Russia. Some emerging markets dividend ETFs apply heavy overweights to Russia relative to the MSCI Emerging Markets Inde. With just 2.3% of its weight allocated to Russia, EMHD is significantly underweight the controversial country.
Regarding dividends, EMHD’s low Russia exposure could prove efficacious. Markit expects Russian energy names to pare dividends by 6% while forecasting a 14% drop in payouts by the country’s financial services firms. Earlier this month, OAO Gazprom and OAO Rosnet, Russia’s two largest oil companies, slid to five year lows after JPMorgan Chase pared its rating on the stocks, citing troubling dividend forecasts. [Going the Wrong Way With Russia ETFs]
Even with the light weight to Russia, a chronically cheap market, EMHD is far from richly valued. At the end of the third quarter, EMHD’s P/E ratio was just 9.8 with a price-to-book ratio of 1.26, according to EGShares data.
EGShares EM Dividend High Income ETF
