Thursday, July 12, 2007

Its here! DEM - Emerging Markets High-Yielding Equity Fund

See this announcement. The corresponding index is here.

I have been waiting for this for a long time. Dividend weighted indices where stocks are present in the index in proportion to cash dividends paid appeal more to a value investor than a market cap weighted index where stocks are present simply because their market cap is high. Market cap is (no of shares) X (price per share) or what you would have to pay to buy all the shares in the company.

Anyway the numbers as mentioned in the links above are:
Dividend Yield 6.28
Price/Earnings 14.87
Estimated Price/Earnings N/A
Price/Book 2.22
Price/Sales 0.68
Price/Cash Flow 5.57
5 year volatility
10 year Index backtest
vs 10 year MSCI EM

India and Russia surprisingly have less than 1% representation each. China is represented indirectly via H shares listed in Hong Kong. The ETF expenses are a hefty 0.63%.
The underlying index has a compelling 6.47% gross yield however as they warn
"Gross Index Yield reflects yield on index constituents prior to individual country
withholding taxes and is not related to the distribution yield of the fund." The volatility is also high - not that a buy and hold for decades investor like me cares about volatility.

To summarize I would prefer this to EEM. I admit to a personal bias for fundamental indexing.

I do not have a position in this yet.


returntomean said...

update! bought some on july 28 2007 at 49.5

Dennis Mangan said...

I just bought this myself. Looks like the best way to play emerging markets.

returntomean said...

I bought even more in the recent fall. I honestly do not know where the price will go next year, but in ten years I feel it will do better than the SNP500 atleast. The valuations are just too compelling.