Investors can find all kinds of advantages by looking abroad right now. Facing overvalued equities at home as well as stubborn inflation, U.S. investors may want to diversify. One area that appeals right now, emerging markets, offers upside without the same rising rate issues. Adding in dividends can help as well. The emerging markets dividends ETF EDOG may appeal to those investors, especially with the ETF sending a key buy signal.
Many emerging markets saw their central banks raise rates much earlier than the U.S. Federal Reserve did, helping them tame inflation. That along with a rebound in global commodities demand, for example, contributes to a broader case for emerging markets equities. Overall economic growth in countries like India, and even China, despite a slowdown, can also appeal to investors worried about expensive U.S. overconcentration.
Those actors may drive investors to consider an emerging markets dividends ETF. Investors can rely on dividends to help navigate low information market sectors in certain emerging markets. Healthy dividends help indicate which firms might beat out competitors even in certain niche sectors. As such, the ALPS Emerging Sector Dividend Dogs ETF (EDOG ) may offer one intriguing option.
See more: Q&A With SS&C ALPS Advisors Chief ETF Strategist Paul Baiocchi
EDOG tracks the S-Network Emerging Sector Dividend Dogs Index, which equal weights ten different GICS sectors except real estate. It then invests in the five best dividend-yielding stocks within each of those sectors. That empowers EDOG to invest across emerging markets to find the firms that, thanks to their dividends, may theoretically offer strong opportunities.
The emerging markets dividends ETF holds about 50 stocks, believing that firms with solid dividends may often have prices less than their true value. EDOG charges 60 basis points (bps) and has returned 13.2% YTD. The strategy is also sending a key buy signal, with its price rising above its 200-day Simple Moving Average (SMA) as of Friday. For those investors looking abroad, EDOG may be one strategy to watch.
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for EDOG, for which it receives an index licensing fee. However, EDOG 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 EDOG.
