NEW YORK (TheStreet) --The new year has started with a flurry of new exchange-traded funds, with 10 listing on Thursday alone, according to IndexUniverse.
Van Eck Global, an investment-management firm, launched four funds this week, including the Market Vectors MSCI Emerging Markets Quality Dividend ETF (QDEM). Companies in QDEM have a yield that is 30% higher than the parent index, the MSCI Emerging Markets Index, which is tracked by the iShares MSCI Emerging Markets ETF (EEM).
Index constituents must have at least five years of dividend growth, and MSCI must believe that the dividends are sustainable.
At the country level, QDEM is heaviest in China at 32%, South Africa 13%, Russia at 12% and Taiwan at 10%; there are more than 20 countries in all. Financials make up 30%, followed by energy at 25%, telecom at 15% and materials 10%.
Most of the larger holdings in the fund are familiar companies, including China Mobile (CHL) at 5.1% of the fund and Gazprom (OGZPY) at 5%. Also included in the top 10 are three of the big Chinese banks.
There are several issues to consider before buying the fund.
The country weighting is lopsided. For years, China has had tremendous promise, but the results have lagged. For the last five years, the iShares China Large Cap ETF (FXI) is up 43%, according to Google Finance, compared with 73% for EEM.
China faces some serious obstacles to outperformance, including a threat of an economic slowdown and potentially unsustainable debt burdens.