Is SPDR S&P Emerging Markets Dividend ETF (EDIV) a Strong ETF Right Now?

Launched on 02/23/2011, the SPDR S&P Emerging Markets Dividend ETF (EDIV) is a smart beta exchange traded fund offering broad exposure to the Broad Emerging Market ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by State Street Global Advisors, and has been able to amass over $372.74 million, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the S&P Emerging Markets Dividend Opportunities Index before fees and expenses.

The S&P Emerging Markets Dividend Opportunities Index includes 100 tradable, exchange-listed common stocks from emerging market countries that offer high dividend yields.

Cost & Other Expenses

Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.49%.

The fund has a 12-month trailing dividend yield of 4.13%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Taking into account individual holdings, Ntpc Ltd (NTPC) accounts for about 3.70% of the fund's total assets, followed by Power Grid Corp Of India Ltd (PWGR) and Hero Motocorp Ltd (HMCL).

EDIV's top 10 holdings account for about 28.63% of its total assets under management.

Performance and Risk

The ETF has added roughly 3.26% and it's up approximately 37.33% so far this year and in the past one year (as of 02/23/2024), respectively. EDIV has traded between $24.98 and $33.58 during this last 52-week period.

The ETF has a beta of 0.68 and standard deviation of 14.49% for the trailing three-year period, making it a medium risk choice in the space. With about 134 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P Emerging Markets Dividend ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $75.38 billion in assets, iShares Core MSCI Emerging Markets ETF has $75.49 billion. VWO has an expense ratio of 0.08% and IEMG charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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SPDR S&P Emerging Markets Dividend ETF (EDIV): ETF Research Reports

iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports

Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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