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The WisdomTree Emerging Markets High Dividend ETF (DEM) was launched on 07/13/2007, and is a smart beta exchange traded fund designed to offer 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Managed by Wisdomtree, DEM has amassed assets over $1.90 billion, making it one of the larger ETFs in the Broad Emerging Market ETFs. DEM seeks to match the performance of the WisdomTree Emerging Markets High Dividend Index before fees and expenses.
The WisdomTree Emerging Markets High Dividend Index is a fundamentally weighted index that measures the performance of the highest dividend yielding stocks selected from the WisdomTree Emerging Markets Dividend Index.
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.
Operating expenses on an annual basis are 0.63% for DEM, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.81%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Vale Sa (VALE3) accounts for about 7.27% of total assets, followed by China Construction Bank Corp H and Petroleo Brasileiro Sa (PETR3).
Its top 10 holdings account for approximately 26.76% of DEM’s total assets under management.
Performance and Risk
Year-to-date, the WisdomTree Emerging Markets High Dividend ETF has added about 9.59% so far, and is up about 19.22% over the last 12 months (as of 11/16/2021). DEM has traded between $38.78 and $47.61 in this past 52-week period.
The ETF has a beta of 0.82 and standard deviation of 22.10% for the trailing three-year period, making it a medium risk choice in the space. With about 500 holdings, it effectively diversifies company-specific risk.
WisdomTree Emerging Markets High 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.
IShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index and the Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index. IShares Core MSCI Emerging Markets ETF has $80.92 billion in assets, Vanguard FTSE Emerging Markets ETF has $82.38 billion. IEMG has an expense ratio of 0.11% and VWO charges 0.10%.
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.
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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WisdomTree Emerging Markets High Dividend ETF (DEM): 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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