With a nearly 20.5% weight to Russia, the WisdomTree Emerging Markets Equity Income Fund (NYSEArca: DEM) could also be affected by reduced Russian dividends, though DEM does feature Lukoil among its top-10 holdings.
Although DEM has been previously criticized for its overweight to Russia with critics asserting the ETF is more volatile as a result, those complaints miss the mark. For example, the WisdomTree Emerging Markets Equity income Index (WTEMHY), DEM’s underlying index, has a beta of just 0.81 against the MSCI Emerging Markets Index since June 2007, according to WisdomTree data. [Russia’s Rise Lifts This Broader EM ETF]
Importantly, constituents in DEM’s underlying index are weighed by annual dividends paid, indicating that if Russian dividends deteriorate relative to other emerging markets, the country’s presence in DEM could be reduced.
DEM’s Russia weight is also buffered by a combined weight of over 29% to China and Taiwan. China is the largest emerging markets dividend payer in dollar terms while Taiwan has long had one of the most favorable dividend policies in the developing world. DEM has a 30-day SEC yield of 4.51%.
Market Vectors Russia ETF
Tom Lydon’s clients own shares of DEM.