QDEM has also managed to trade higher this year despite its 21.6% weight to the energy. Fortunately, the ETF’s combined weight to volatile Brazilian and Russian stocks is just 15%. That is overweight compared to the MSCI Emerging Markets Index, which serves as a reminder that QDEM’s quality filter can work in investors’ favor even with controversial Brazilian and Russian stocks.
China, the largest emerging markets dividend payer in dollar terms, is QDEM’s largest country allocation at 36.9%.
As Market Vectors notes, the quality dividend factor as measured by MSCI has historically provided solid long-term returns. MSCI’s high dividend yield index features companies with a higher return on equity and lower long-term debt-to-capital ratio than the traditional cap-weighted benchmark, according to Market Vectors data.
Market Vectors MSCI Emerging Markets Quality Dividend ETF
Tom Lydon’s clients own shares of EEM.