Published Sun, 13 Sep 2020 05:36:47 -0400 on Seeking Alpha
Seeking AlphaETF AnalysisiShares Emerging Markets Dividend ETF: A High-Yield ETF To Position For A Potential Mean-Reversion Of Emerging MarketsSep. 13, 2020 5:36 AM ET|| About: iShares Emerging Markets Dividend ETF (DVYE)by: Michael A. Gayed, CFAMichael A. Gayed, CFA The Lead-Lag ReportAnticipate Corrections and Volatility with Award Winning ResearchSummaryDVYE offers you exposure to EMs that have traditionally underperformed but are due some mean-reversion.
The ETF assuages the inherent volatility of EMs by offering you a significant dividend yield of 7.3%+; valuations are cheap too.
The ETF is favorably exposed, both sectorally and geographically, and is well-diversified.
Reversion to the mean is the iron rule of the financial markets. - John C. Bogle
Potential investors who are on the lookout for suitable opportunities to park their dormant cash may currently be feeling a little disillusioned; record-low benchmark interest rates the world over have cut the legs out of high-yield avenues, whilst some of the traditionally popular alpha-generating investment pockets are so scaldingly hot, that one wonders how much of upside merit is to be found at these lofty heights. The iShares Emerging Markets Dividend ETF (NYSEARCA: DVYE) could perhaps serve as an ideal alternative that addresses the current twin challenges of low yield and high valuations.
DVYE gives you access to 100 dividend-paying emerging market stocks by tracking The Dow Jones Emerging Markets Select Dividend Index - a dividend-weighted index that selects stocks based on the indicated dividend yield. This is the largest fund in the dividend-based emerging markets category, with an AUM of more than $630m. The MER (Management Expense Ratio) of 0.49% is not the cheapest in this space, but is also not as expensive as other peers such as EDOG, BICK, and EWX. Current valuations are extremely cheap with a P/E ratio of 6.4x and a P/BV of 0.91x. You also get an excellent income yield dimension of 7.3%... Read more