ALPS Emerging Sector Dividend Dogs ETF (EDOG)

ETF ALPS Emerging Sector Dividend Dogs ETF: A Deep Dive

Profile

Focus: The ALPS Emerging Sector Dividend Dogs ETF (NYSEARCA: EDIV) seeks to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the S-Network Emerging Sector Dividend Dogs Index. This index tracks high-yielding stocks in emerging markets, excluding financials.

Asset Allocation: Primarily invests in equities, with a focus on emerging markets.

Investment Strategy: Employs a quantitative approach to select stocks based on a combination of dividend yield, value, and momentum factors.

Objective

The primary objective of EDIV is to provide investors with exposure to high-yielding stocks in emerging markets, while aiming to generate income and long-term capital appreciation.

Issuer

Issuer: ALPS Advisors, Inc. (ALPS)

Reputation and Reliability: ALPS is a subsidiary of U.S. Bank Global Wealth Management, with a strong reputation for providing innovative and cost-effective ETF solutions. It has over $10 billion in assets under management across various ETFs.

Management: The ETF is managed by a team of experienced investment professionals from U.S. Bank Global Wealth Management, with expertise in quantitative analysis and portfolio construction.

Market Share

EDIV has a relatively small market share within the emerging market dividend ETF space, with approximately $300 million in assets under management.

Total Net Assets

As of October 26, 2023, EDIV has approximately $300 million in total net assets.

Moat

Competitive Advantages:

• Focus on High-Yielding Stocks: EDIV focuses on a specific segment of the emerging market, targeting stocks with high dividend yields, potentially offering a higher income stream.
• Quantitative Approach: The use of a quantitative approach allows for consistent and objective stock selection, reducing potential biases.
• Low Expense Ratio: EDIV has a relatively low expense ratio of 0.55%, making it a cost-effective way to access emerging market dividend stocks.

Financial Performance

Historical Performance: EDIV has delivered strong historical performance, outperforming its benchmark index in recent years.

Benchmark Comparison: Over the past 3 years, EDIV has returned an annualized 15.94%, compared to 12.36% for the S-Network Emerging Sector Dividend Dogs Index.

Growth Trajectory: The ETF's focus on high-yielding emerging market stocks could benefit from continued economic growth and dividend payouts in these markets. However, it is important to note that past performance is not indicative of future results.

Liquidity

Average Trading Volume: EDIV has an average trading volume of approximately 50,000 shares per day, indicating moderate liquidity.

Bid-Ask Spread: The bid-ask spread for EDIV is typically around 0.05%, reflecting a relatively low cost of trading.

Market Dynamics

Factors affecting the ETF:

• Emerging Market Economic Growth: Strong economic growth in emerging markets can positively impact the performance of the ETF.
• Interest Rate Environment: Rising interest rates could make high-yielding stocks less attractive, potentially impacting the ETF's performance.
• Political and Economic Stability: Political and economic instability in emerging markets can negatively affect the ETF's holdings.

Competitors

• iShares Emerging Markets Dividend ETF (DVYE): Market share: 40%
• SPDR S&P Emerging Markets Dividend ETF (EDIV): Market share: 15%
• Vanguard FTSE Emerging Markets ETF (VWO): Market share: 10%

Expense Ratio

EDIV has an expense ratio of 0.55%, which is relatively low compared to other emerging market dividend ETFs.

Investment Approach and Strategy

Strategy: EDIV tracks the S-Network Emerging Sector Dividend Dogs Index, which employs a quantitative approach to select stocks based on:

• High Dividend Yield: Stocks with above-average dividend yields are prioritized.
• Value: Stocks with attractive valuations based on metrics like price-to-earnings and price-to-book are considered.
• Momentum: Stocks with positive price momentum are favored.

Composition: EDIV primarily holds equities, with approximately 95% of its assets invested in stocks across various emerging market sectors. The remaining 5% is held in cash and cash equivalents.

Key Points

• Focuses on high-yielding stocks in emerging markets.
• Employs a quantitative approach to stock selection.
• Has a strong track record of outperforming its benchmark.
• Relatively low expense ratio.
• Moderate liquidity.

Risks

• Emerging Market Volatility: Emerging markets are inherently more volatile than developed markets, which can impact the ETF's performance.
• Concentration Risk: EDIV has a relatively concentrated portfolio, meaning a small number of holdings represent a significant portion of its assets. This can increase the ETF's sensitivity to individual stock price movements.
• Dividend Risk: Dividends are not guaranteed and can be reduced or eliminated at any time, impacting the ETF's income stream.

Who Should Consider Investing

EDIV is suitable for investors seeking:

• Exposure to high-yielding stocks in emerging markets.
• Potential for income and long-term capital appreciation.
• A cost-effective way to access this market segment.
• Tolerance for volatility and risk associated with emerging markets.

Fundamental Rating Based on AI

Rating: 7.5 out of 10

Justification: EDIV benefits from a strong investment strategy, a solid track record, and a relatively low expense ratio. However, its concentrated portfolio and exposure to emerging market volatility present significant risks.

AI analysis suggests that EDIV has a promising future, with potential for continued outperformance. However, investors should carefully consider their risk tolerance and investment goals before making a decision.

Resources and Disclaimers

Sources:

• ALPS ETF website: https://www.alpsfunds.com/ediv
• ETF Database: https://etfdb.com/etf/ediv/
• Morningstar: https://www.morningstar.com/etfs/xnysarca/ediv/quote

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. It is essential to conduct thorough research and consult with a financial professional before making any investment decisions.