Has the initial wave of geopolitical risk ebbed away already? Tensions in the Middle East remain at historic highs, but oil markets seem to believe the initial risk has subsided somewhat. Oil prices fell dramatically Monday following limited Israel-Iran escalation. While tensions are very high, that turn of events could speak to a broader case that international equities may not suffer geopolitics as much as some think. In that case, a solid international equities ETF like IDOG could make a strong case for investing.
See more: Don’t Ignore the Potential of Quality Dividend Investing
The ALPS International Sector Dividend Dogs ETF (IDOG ), charges a 50 basis point (bps) fee. The strategy adds an intriguing strategic layer on top of a traditional international equities fund. IDOG tracks an equal-weighted index which picks the firm highest dividend yielding names in each of the ten GICS sectors. IDOG focuses only on developed economies outside of the U.S. and Canada. Taken together, the strategy totals 50 names. Its equal weighting helps it limit exposure to traditionally dividend heavy areas like utilities or health care.
Those dividend numbers can also provide key information when looking at markets where information comes at a premium. Dividends can indicate that firms offer healthy internal outlooks. Such an approach can help identify standout companies for those who want to buck geopolitical risk concerns.
IDOG has returned 10% over the last three years, per SS&C ALPS Advisors data. That has more than doubled the return of the Morningstar Developed Markets ex-North America Index. That performance also significantly outperformed the ETF’s ETF Database Category and Factset Segment averages.
Looking ahead, geopolitical risk may deter many investors from adding helpful international exposure. Diversifying away from concentration risk in the U.S. could help significantly. A fund like IDOG and its use of dividends as data points could help it stand out if geopolitical risk ebbs.
VettaFi LLC (“VettaFi”) is the index provider for IDOG, for which it receives an index licensing fee. However, IDOG is 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 IDOG.
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