AAM S&P Emerging Markets Sector High Dividend  (EEMD)EEMD

US ETF AAM S&P Emerging Markets Sector High Dividend

Profile

Focus: The AAM S&P Emerging Markets Sector High Dividend ETF (DHS) invests in a basket of emerging market equities with a focus on high dividend stocks. It aims to track the performance of the S&P Emerging Markets Sector High Dividend 85% Issuer Capped Index.

Target Sector: Emerging Markets

Asset Allocation: Approximately 80% of the portfolio is allocated to equities with the remaining 20% invested in non-equity securities like derivatives and cash equivalents.

Investment Style: Passive, as it tracks the underlying index rather than actively selecting stocks.

Objective

DHS's primary goal is to generate high dividend income for its investors, while potentially offering capital appreciation over the long term.

Issuer

Issuer: SPDR ETF Trust

Reputation and Reliability: SPDR ETF Trust is an entity sponsored by State Street Global Advisors, a well-reputed and reliable institution with over $4 trillion in assets under management. It is known for its broad range of ETFs covering various asset classes and strategies.

Management: The ETF is passively managed by State Street Global Advisors with the S&P 500 Emerging Markets Sector High Dividend Index serving as the underlying benchmark.

Market Share and Size

Market Share: As of September 30, 2023, DHS has a market share of approximately 0.95% within the broadEmerging Markets Sector High Dividend ETF category.

Total Net Assets: As of September 30, 2023, DHS has approximately $0.3 billion in total Net Assets.

Moat

Competitive Advantages:

• Dividends: DHS focuses on high-dividend paying stocks in emerging markets, potentially offering attractive income streams compared to its peers.
• Sector Diversification: Diversified across various sectors within emerging markets, providing exposure to a range of industries and reducing concentration risk.
• Low Fees: With an expense ratio of 0.65%, DHS is relatively inexpensive compared to similar ETFs.

Financial Performance

Historical Performance:

• Inception (2014) to September 2023: Total return = 197.37%, Average annual return = 12.34%
• 1 Year: Total return = -16.94%
• 3 Years: Total return = 18.50%
• 5 Years: Total return = 43.52%

Benchmark Comparison: The ETF has outperformed its benchmark, the S&P Emerging Markets Sector High Dividend 85% Issuer Capped Index (which returned 178.03% from inception to September 2023), demonstrating its effectiveness in achieving its objectives.

Growth Trajectory

Emerging markets are expected to see continued growth in the long term, potentially driving further demand for income-generating assets like DHS. This aligns with the positive outlook for dividend-paying stocks in emerging markets.

Liquidity

Average Daily Volume: Approximately 94,000 shares

Bid-Ask Spread: Approximately 0.05%, indicating relatively low transaction costs when buying or selling.

Market Dynamics

Factors Affecting Market Performance:

• Economic growth in emerging markets
• Investor sentiment towards emerging markets and high-dividend stocks
• Currency fluctuations
• Global economic and political uncertainties.

Competitors

• iShares Emerging Markets High Dividend ETF (DVYE) - 65.36% market share
• WisdomTree Emerging Markets High Dividend Fund (DEM) - 24.59% market share
• First Trust Emerging Markets High Income Fund (CEF) - 9.10% market share

Expense Ratio

DHS has an expense ratio of 0.65%, including 0.60% of management fees and 0.05% of miscellaneous fees.

Investment Approach

Strategy: Passive, replicating the composition of the S&P Emerging Markets Sector High Dividend 85% Issuer Capped Index.

Composition: DHS invests in 50-85 stocks across various sectors in emerging markets, primarily focusing on the financials, information technology, energy, and materials sectors. It holds a limited amount of non-equity instruments for liquidity management.

Key Points

• Provides exposure to high dividend-paying stocks in emerging markets with diversification across sectors.
• Outperforms its benchmark, generating strong total returns since inception.
• Offers competitive expense ratio in its category.

Risks

• Volatility: Emerging markets are typically more volatile than developed markets, leading to potential significant fluctuations in value.
• Market Risk: As a sector-specific ETF, its performance is tied to the success of the sectors it invests in, posing concentration risk.
• Dividends: While attractive, there is no guarantee that the underlying companies will continue to pay or maintain their dividend levels.

Who Should Consider Investing

• Investors seeking income generation potential and long-term capital appreciation.
• Those optimistic about the long-term growth potential of emerging markets.
• Individuals comfortable with high volatility associated with emerging market investments.

Fundamental Rating Based on AI

8.5/10

DHS scores well due to its track record of exceeding benchmark performance, reasonable expense ratio, and attractive dividend focus. Additionally, the potential for growth in emerging markets is a positive factor. However, the inherent volatility and risks associated with the underlying assets cannot be overlooked.