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Funds Look Overseas For Yield

NEW YORK ( TheStreet) -Macroeconomic issues plaguing the U.S. have made for jittery market conditions that continue to test the minds and stomachs of investors.

Given the qualities which have shaped the domestic investing environment, it is understandable that income and international investing strategies have come into vogue in 2010.

As seen from the most recent flow data compiled by the National Stock Exchange, ETF investors have developed an insatiable thirst for emerging markets and yield-bearing equities.

Funds such as the Vanguard Emerging Market ETF (VWO), SPDR S&P Dividend Achievers ETF (SDY), iShares MSCI Brazil Index Fund (EWZ) and iShares Dow Jones Select Dividend Index Fund (DVY) saw some of the largest inflows across the entire ETF industry.

While it is possible to use funds such as SDY and VWO to take advantage of the benefits of international- and dividend-oriented investing strategy on an individual basis, there are also a number of products which investors can use to take advantage of both of these strategies at once.

The iShares Dow Jones International Dividend Index Fund (IDV), PowerShares International Dividend Achievers Portfolio (PID), the Federated International Strategic Value Dividend Fund (IVFCX), and the WisdomTree Emerging Market Equity Income Fund (DEM) are four liquid products which seek to expose investors to a bevy of internationally-based companies which are dedicated to paying out comfortable dividends to investors.

Investors holding these funds have enjoyed strong yields ranging from 3% to 4%.

Aside from their attractive distributions, over the past six months, all four of these funds have managed to outperform the broad U.S. markets, as indicated by their performance against the SPDR S&P 500 ETF (SPY).

In the case of IDV, PID and IVFCX, these funds avoid getting too carried away with emerging market exposure. Although they have proven to be strong in recent months, the markets of nations such as Brazil, Indonesia and Vietnam remain volatile and therefore may not be suited for conservative investors fearful of market swings.

Instead, IDV, PID, and IVFCX appear more dedicated to providing investors with stable returns over the long term. For instance, the funds center the largest percentages of their portfolios on nations considered part of the developed world.

Geographically, countries like the United Kingdom are the major drivers of the funds' performance with13% of IDV, 22% of PID and 27% of IVFCX dedicated to its marketplace. Australia and Canada are two other influential global players representing substantial geographic chunks of each of these three funds.

This may not sit well with aggressive investors looking specifically for dividend-paying emerging market companies. However, they are not out of luck. Using a product like DEM, investors can gain access to yield-bearing companies hailing from some of the hottest corners of the globe.
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IDV $28.96 -0.03%
PID $13.94 -0.21%
DVY $81.51 -0.22%
VWO $33.39 0.00%
DEM $34.07 -0.06%


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