High-Yield ETF’s Recent Loss Provides Opportunity

Although emerging markets do not get much press these days, thanks in part to bad returns in 2018, they’re off to a great start this year.

So perhaps it is not surprising that iShares Emerging Markets Dividend ETF (DVYE) is a top performer among the dozens of income-generating strategies I track. It is up over 3% so far in 2019.

One of the larger funds among the broad emerging market ETFs, DVYE has $530 million in assets that are managed by BlackRock. The iShares Emerging Markets Dividend ETF is down since the beginning of 2018 by almost 6%, but it’s still up over 30% since 2016.

Launched in 2012, DVYE is a smart-beta ETF, which by definition considers factors such as size, value and volatility instead of the typical cap-weighted index strategy, making it an ideal ETF for investors to maximize return and minimize risk.

This fund tracks the Dow Jones Emerging Markets Select Dividend Index — a dividend-weighted index of high-dividend-paying emerging markets companies, according to

A recent Zacks article listed DVYE as a good high-yield ETF to own, since it paid a total of $2.13 a share in dividends in 2018 on a quarterly basis to produce a yield of more than 5.50%.

The focus of the iShares Emerging Markets Dividend ETF is much narrower compared to other emerging markets ETFs that track large-cap companies in market-cap-weighted indices by holding 100 of the highest-yielding stocks from emerging markets.

This fund’s top holdings, comprising 19.21% of its total assets, are Farglory Land Development Co. Ltd. (5522.TW), Seaspan Corp. (SSW), Severstal PAO (CHMF), Highwealth Construction Corp. (N/A), ALROSA PJSC (ALRS), Arcadyan Technology Corp. (3596.TW), Barwa Real Estate Co. QSC (BRES), Energy Company of Minas Gerais Participating Preferred (CMIG4.SA), Tatneft PJSC (TATN) and Novolipetsk Steel PJSC GDR (NLMK).

Long-term investors who are looking for exposure to emerging markets should consider this fund, which also is a good way to add international diversity to a portfolio. As always, investors should exercise their due diligence in deciding whether DVYE is a worthwhile investment.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.