Now that investors have had time to digest the EU statements
in full, it's apparent the great EU bailout plan is rather vague,
and will take significant time to execute and repair all the
damage. Will it be enough to help emerging markets?
Couple the euro zone results with the U.S., China, India, and
Russia all slowing, and both India and China's governments
looking to take additional measures to avoid a hard landing, and
it doesn't look good for strong growth in the second
half of 2012.
Emerging Markets are showing increasing signs of contagion as
the euro zone crisis weighs on the developed markets that
emerging markets depend on for growth.
Where do you hideout during such troubled times? It's too
risky for retail investors to hide out in euro zone bonds. With
the world seeking safe-haven in U.S. Treasuries, your first
thought might be gold, though I find it to be too volatile to
provide a steady stream of income. This is why I'm taking a page
out of the domestic trading book and applying it to emerging
markets. I'm hunting for yield in emerging market
dividend-focused ETFs.
Normally I'd go in-depth with each of the names below because
I fear readers would pull the trigger prior to doing their
homework, but with the early close and the holiday, you should
have plenty of time to dig into these names and find which works
best for you.
I caution everyone reading this: do not jump into the largest
yielding ETF because it has the biggest dividend. You need to
match these names to your risk, investment style, and time
horizon.
The iShares Emerging Markets Dividend Index Fund (
DVYE
,
quote
) yields 7.01%. According to the Yahoo Finance fund summary:
"The investment seeks to replicate, net of expenses, the Dow
Jones Emerging Markets Select Dividend Index. The fund generally
invests at least 80% of its assets in the securities of the
index. The index measures the performance of a group of equity
securities in emerging market countries that have provided
relatively high dividend yields on a consistent basis over time.
Component companies include industrials, materials and
telecommunications companies. The fund may invest in other
investments, including futures, options, and swaps related to the
index, as well as cash and cash equivalents, including shares of
money market funds. It is non-diversified."
The SPDR S&P Emerging Markets Dividend Fund (
EDIV
,
quote
) yields 5.15%. According to the Yahoo Finance fund summary:
"The investment seeks to provide investment results that,
before fees and expenses, correspond generally to the price and
yield performance of an index that tracks dividend paying
securities of publicly-traded companies in emerging markets. The
fund generally invests substantially all, but at least 80%, of
its total assets in the securities comprising the index, or in
American Depositary Receipts ("ADRs") or Global Depositary
Receipts ("GDRs") based on securities comprising the index. It
may invest in equity securities that are not included in the
index, cash and cash equivalents or money market instruments. The
fund is non-diversified. "
The WisdomTree Emerging Markets Small Cap Dividend Fund (
DGS
,
quote
) yields 3.34%. According to the Yahoo Finance fund summary:
"The investment seeks to track the price and yield
performance, before fees and expenses, of the WisdomTree Emerging
Markets SmallCap Dividend Index. The fund normally invests at
least 95% of the fund's total assets (exclusive of collateral
held from securities lending) in the component securities of the
index. It employs a "passive management" - or indexing -
investment approach designed to track the performance of the
WisdomTree Emerging Markets SmallCap Dividend Index. The fund
attempts to invest all, or substantially all, of its assets in
the stocks that make up the index. It is non-diversified."
The WisdomTree Emerging Markets Equity Income Fund (
DEM
,
quote
) yields 4.02%. According to the Yahoo Finance fund summary:
"The investment seeks to track the price and yield
performance, before fees and expenses, of the WisdomTree Emerging
Markets Equity Income Index. The fund normally invests at least
95% of the fund's total assets (exclusive of collateral held from
securities lending) in the component securities of the index. It
employs a "passive management" - or indexing - investment
approach designed to track the performance of the WisdomTree
Emerging Markets Equity Income Index. The fund attempts to invest
all, or substantially all, of its assets in the stocks that make
up the index. It is non-diversified."
The Vanguard MSCI Emerging Markets ETF (
VWO
,
quote
) yields 2.27%. According to the Yahoo Finance fund summary:
"The investment seeks to track the performance of a benchmark
index that measures the investment return of stocks issued by
companies located in emerging market countries. The fund employs
an indexing investment approach by investing substantially all
(normally about 95%) of its assets in the common stocks included
in the MSCI Emerging Markets Index, while employing a form of
sampling to reduce risk. The MSCI Emerging Markets Index includes
approximately 820 common stocks of companies located in emerging
markets around the world."
The iShares MSCI Emerging Markets Index Fund (
EEM
,
quote
) yields 2.09%. According to the Yahoo Finance fund summary:
"The investment seeks investment results that correspond
generally to the price and yield performance, before fees and
expenses, of the MSCI Emerging Markets Index (the "underlying
index"). The fund generally invests at least 90% of assets in the
securities of its underlying index and in depositary receipts
representing securities in its underlying index. The underlying
index is designed to measure equity market performance in the
global emerging markets. The fund invests all of its assets that
are invested in India in a wholly owned subsidiary located in the
Republic of Mauritius (the "Subsidiary"). It is
non-diversified."