Why Have Emerging Market Income ETFs Underperformed?

In total return terms, all three dividend-oriented emerging-markets ETFs underperformed the MSCI Emerging Markets Index since their respective inceptions

Monika Dutt 7 July, 2016 | 8:00AM
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Rock-bottom interest rates have created a challenging environment for investors eyeing a decent and fairly reliable income stream. Many investors are turning towards dividend-oriented strategies to compensate for the low yields bonds offer.

Aside from providing investors with income, dividend paying companies tend to have stronger corporate governance structures in place. As such, dividend equity funds often provide access to better quality holdings, but this is not always the case.

While many investors associate stable equity dividends solely with developed economies, the concept is also applicable to emerging markets. And exchange-traded funds have facilitated access to that asset class.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
iShares EM Dividend ETF USD Dist21.50 USD1.18Rating
SPDR S&P EmMks Dividend Aristocrats ETF15.36 USD-1.38Rating
WisdomTree Emerging Mkts Eq Inc ETF15.69 USD1.01Rating

About Author

Monika Dutt  is a Passive Strategies Research Analyst for Morningstar Europe

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