This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

A New Emerging-Markets Dividend Growth Fund

Stocks in this article: DGRE EMDG

NEW YORK ( TheStreet) -- Investors in exchange-traded funds continue to demand yield, and ETF providers are scrambling to meet that demand.

The latest offering is the WisdomTree Emerging Markets Dividend Growth Fund (DGRE).

This comes on the heels of the recently listed EG Shares Emerging Market Dividend Growth ETF (EMDG).

The dividend growth strategy is based on the idea that the dividend income stream will grow faster than inflation. What's more, companies with histories of dividend growth have often outperformed the broad market.

WisdomTree doesn't simply populate its fund with stocks that have increased dividends over five years (or some other period). Instead, the company takes the stocks from the WisdomTree Emerging Markets Dividend Index and ranks them based on expected long-term earnings growth and the three-year averages for returns on equity and returns on assets. From there, the highest scoring companies are weighted in the index by the dividend paid.

The methodology is not simple, but as is the case with all of WisdomTree's funds, the firm provides plenty of research at its Web site to explain the methodology.

The resulting product ends up looking much different than the similarly named EG Shares fund. DGRE's heaviest country exposures are Brazil and South Africa, both at 14%; followed by at Indonesia at 13%; and Russia, Mexico and Thailand, each with about 10%. China has only a 7% weighting in DGRE, vs. 19% in EMDG from EG Shares.

The largest sectors in DGRE are telecom and consumer staples, which each have 18% weightings, followed by financials and materials, which each have 13% weightings. By comparison, the largest sectors in EMDG are financials, at 20%, followed by energy at 17%.

Many of DGRE's holdings will be familiar to U.S. investors. They include Taiwan Semiconductor (TSM), which is the largest holding in the fund at 5%. EMDG specifically excludes Taiwan because some index providers don't consider Taiwan to be an emerging market, but TSM is the only Taiwanese holding in DGRE.

If there is to be any meaningful performance dispersion between DGRE and EMDG it would seem to come from EMDG's more than 8% weighting in Chinese banks compared to less than 1% for DGRE. China has a very clear bear case based on overcapacity, slowing growth and an overextended financial sector.

An ETF investor who wants broad-based emerging-market exposure in his or her portfolio and is concerned about China would logically look to a fund such as DGRE.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs