Tired of the weekly Fed soap opera? U.S. investors are beset by data points with each passing week about inflation, bringing to mind Katy Perry’s “Hot N Cold” as markets whip back and forth between hot economic data and the cold prospect of multiple rate hikes. For those investors looking to move past an overvalued U.S. market beset by volatility, the WisdomTree International High Dividend Fund (DTH) could be an interesting international dividend ETF to watch.
The Fed may have already raised rates faster than it has in decades, but markets are now pricing in multiple hikes this year. That’s a pretty big difference from how markets saw the Fed entering the year when a slower pace – and perhaps even rate cuts – were being discussed as distinct possibilities.
Now, markets are facing the risk that the Fed might indulge in a “wrathful, Old Testament-style” reaction to an economy that’s still running hot and not slowing down to the bank’s liking. That may yet narrow the path to a soft landing even more, with a hard landing still a real possibility with severe consequences if the Fed isn’t satisfied with how the U.S. economy has responded to its medicine.
Enter the benefits of current income, with dividends as a key source. Dividends have been a popular theme over the last few months given the amount of volatility and uncertainty investors are facing, and they can play a continued role in investors’ portfolios. DTH provides an annual dividend yield of 4.8% with the added benefit of exposure to international equities.
DTH tilts towards high dividend-paying foreign equities, with a heavy tilt towards a rebounding Western Europe, but it does also have a notable exposure to Australia, with exposures spread across several sectors. DTH charges a 58 basis point fee with one-month net inflows of $19.3 million.
DTH has also outperformed its ETF Database Category Average and its Factset Segment Average on a YTD basis by 109 and 99 basis points, respectively. That joins other interesting emerging markets plays, whether in dividends specifically or in burgeoning areas like India. Small cap dividends, too, may be an appealing offering to check out, with similar thinking behind such an approach.
Dividends have been a popular way for investors to buoy their holdings with income recently and can continue to play a role. Add in a foreign equities lens, and an international dividend ETF like DTH merits a place on the investor’s radar.
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