Summer’s arrived, and with it comes the opportunity to revisit allocations. Before clocking out for a nice long summer weekend at the beach, think about diversification. Too much domestic U.S. bias in your portfolio? Looking for new ways to play in the equities space? Emerging markets ETFs offer powerful tools for investors and advisors. Consider these three top emerging markets ETFs that can help your portfolio now and for the rest of the year.
Starting with EDOG has its merits, given its membership in ALPS’ family of “Dogs of the Dow” dividend-focused ETFs. Dividends have proven their worth over the last year, layering current income into portfolios beset by all kinds of volatility. When it comes to emerging markets, however, dividends offer another key benefit: helping to indicate the health of foreign firms. For those U.S. investors that approach EM equities with skepticism, dividends stand out as an indicator of a company’s reliability.
See more: “ALPS Cuts Fees on Dividend Value ETF ‘SDOG’”
EDOG tracks an equal-weighted index that picks the five firms yielding the highest dividends in each of 10 sectors. The ETF charges 60 basis points and has offered an annual dividend yield of 4.6%, returning 4% YTD.
AVSE stands out among top emerging markets ETFs for its application of an ESG screen. Having just passed its one-year anniversary, AVSE actively invests in EM firms of all market caps. AVSE’s managers use third-party ESG data before screening for fundamentals like higher profitability and lower valuations. As such, it does tend to lean towards smaller-cap firms.
The strategy has returned 6.6% YTD while adding $6.4 million in net inflows over the last three months. AVSE charges 33 basis points for its approach.
Rounding out the list, investors can consider GEM for its multifactor approach. The strategy charges 45 basis points to track the Stuttgart Goldman Sachs ActiveBeta EM Equity index. The index considers factors like momentum, value, high quality, and low volatility in assessing emerging markets equities. That can be a source of comfort for investors who feel underequipped to look abroad for lack of knowledge about foreign norms or trends.
GEM charges a 45 basis point fee and has returned 6.6% YTD. It too offers some solid dividends, though less than EDOG, at 3.2%. GEM has also added $44 million in net inflows over the last three months, according to VettaFi.
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for SDOG and EDOG, for which it receives an index licensing fee. However, EDOG and SDOG are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of either ETF.
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