The Opportunity in Emerging Markets Dividend Aristocrats
The growth trade has been a tailwind for equity investors for the past 5 years, across both developed and emerging market indices.
At SPDR, we recently celebrated two years since the adoption of a Dividend Aristocrats approach in emerging market equities.
With an established track record and the shifting growth/value dynamics in equities, investors could consider the opportunity in an emerging market Dividend Aristocrats strategy.
Two years after the index change, why now may be the right time for emerging market Dividend Aristocrats
At SPDR ETFs, we recently passed the 2-year anniversary since the adoption of the S&P Emerging Markets High Yield Dividend Aristocrats® Index as the benchmark for our SPDR® S&P® Emerging Markets Dividend Aristocrats UCITS ETF.1 To learn more about the ETF, and to view its full performance history, please visit its fund page.
In the past 5 years, the market capitalisation-weighted MSCI Emerging Markets Index has been driven by the rally in hyper-growth stocks that have benefited from the structural shift in the global economy. Similar to the highly covered FAANG complex in US equites, the MSCI Emerging Markets Index has experienced a concentration in return contribution from stocks in the consumer discretionary (Alibaba), technology (Taiwan Semiconductor, Samsung) and communication services (Tencent) sectors (see Figure 1).*
Figure 1: Top/Bottom Contributors to Return (Market Benchmark)
Much of the strong performance for the MSCI Emerging Markets Index is attributable to the large position of Alibaba Group in the market-capitalisation weighted index and its strong performance during the referenced time period. Over the 5 years from 31 January 2017, Alibaba made up c. 24% of the market benchmark on average and is up 107%. This position contributed 24.62 of the 57.56 estimated nominal return (and explains c. 42%). Alibaba does not pay a dividend and has traded at an average P/E of 36.7x and P/B of 6.5x over the last 5 years.2 In retrospect, the environment was beneficial for indices holding high growth stocks, such as Alibaba.
In the 2 years since our SPDR® S&P® Emerging Markets Dividend Aristocrats UCITS ETF switched to tracking the newly created Dividend Aristocrats® Index (February 2020), our strategy has performed neutral with the market benchmark MSCI Emerging Markets Index, with both advancing by 5.5% over that time.3 On a year-to-date basis, the SPDR® S&P® Emerging Markets Dividend Aristocrats UCITS ETF has outperformed the market benchmark MSCI Emerging Markets Index by 4.07% (see Figure 2). Much of the positive contribution can be explained by the more recent reversal in the growth/value trade, as well as strong stock selection in real estate, where the Dividend Aristocrats standard appears to be beneficial.
Figure 2: Brinson Attribution by Sector (Portfolio vs. Market Benchmark)
The focus of Dividend Aristocrats on dividend stability would have decreased the historical yield of the portfolio – Dividend Aristocrats is arguably a more conservative approach – but the new index would still have provided a yield premium to the market, on a back-tested basis (see Figure 3). The index yield premium has expanded since the beginning of 2020. The S&P Emerging Markets High Yield Dividend Aristocrats® Index also offers a significant amount active value factor exposure. Value is the third strongest exposure after yield and size (see Figure 4).
Figure 3: Dividend Yield History (Back Test*)
Figure 4: FaCS Absolute Exposure
1 Prior to 7 February 2020, the ETF was benchmarked to the S&P Emerging Markets Dividend Opportunities Index. The S&P Emerging Markets High Yield Dividend Aristocrats® Index was incepted on 30 August 2019.
2 Source: FactSet, as of 22 February 2022.
3 Source: FactSet, as of 28 February 2022. Performance since index change 7 February 2020.
* This information should not be considered a recommendation to invest in a particular sector or to buy or sell any security shown.
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For Investors in Austria: The offering of SPDR ETFs by the Company has been notified to the Financial Markets Authority (FMA) in accordance with section 139 of the Austrian Investment Funds Act. Prospective investors may obtain the current sales Prospectus, the articles of incorporation, the KIID as well as the latest annual and semi-annual report free of charge from State Street Global Advisors Europe Limited, Branch in Germany, Brienner Strasse 59, D-80333 Munich. T: +49 (0)89-55878-400.F: +49 (0)89-55878-440.
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ETF's worden verhandeld zoals aandelen, zijn onderhevig aan beleggingsrisico, fluctueren in marktwaarde en kunnen worden verhandeld tegen prijzen boven of onder de netto-inventariswaarde van de ETF’s. Brokercommissies en kosten van de ETF zullen het rendement verminderen. De wijzigingen in wisselkoersen kunnen een nadelig effect hebben op de waarde, prijs of inkomsten van een belegging. Verder is er geen garantie dat een ETF zijn beleggingsdoelstellingen zal behalen.
DE SPDR-ETF'S VAN SSGA ZIJN MOGELIJK NIET BESCHIKBAAR OF GESCHIKT VOOR U. DE UITGEDRUKTE MENINGEN/INFORMATIE OP DEZE SITE VORMEN GEEN BELEGGINGSADVIES, FINANCIEEL, JURIDISCH, REGLEMENTAIR, BOEKHOUDKUNDIG OF BELASTINGADVIES. BIJ TWIJFEL DIENT MEN STEEDS ONAFHANKELIJK ADVIES IN TE WINNEN. DE INFORMATIE NOCH ENIGE OPINIE OP DEZE SITE VORMT EEN VERZOEK OF AANBOD VOOR DE AAN- OF VERKOOP VAN AANDELEN VAN DE FONDSEN OF ENIG ANDER FINANCIEEL INSTRUMENT.Standard & Poor’s®, S&P® en SPDR® zijn gedeponeerde handelsmerken van Standard & Poor's Financial Services LLC (S&P); Dow Jones is een gedeponeerd handelsmerk van Dow Jones Trademark Holdings LLC (Dow Jones); en deze handelsmerken zijn in licentie gegeven voor gebruik door S&P Dow Jones Indices LLC (SPDJI) en in sublicentie voor bepaalde doeleinden door State Street Corporation. De financiële producten van State Street Corporation worden niet gesponsord, bekrachtigd, verkocht of gepromoot door SPDJI, Dow Jones, S&P, hun respectieve filialen en externe licentiegevers, en geen van deze partijen doen enige verklaring over de raadzaamheid om te beleggen in dergelijke producten, noch aanvaarden zij enige aansprakelijkheid in verband hiermee, inclusief voor fouten, weglatingen of onderbrekingen van een index.
SPDR-ETF's mogen enkel worden aangeboden en verkocht in rechtsgebieden waar dat is toegelaten in overeenstemming met de geldende regels.
Informatie met betrekking tot Mexico
Deze informatie is geen marketing of aanbieding van effecten en is niet ook niet zo bedoeld, en mag bijgevolg niet als dusdanig worden opgevat. De fondsen waarnaar in dit document wordt verwezen, zijn niet en zullen niet worden geregistreerd onder de Mexicaanse wet op de effectenmarkten (Ley del Mercado de Valores) en mogen in Mexico niet aan het publiek worden aangeboden of verkocht. De documentatie met bekendmakingen in verband met een van de bovengenoemde fondsen mag niet openbaar worden verspreid in Mexico en aandelen van de fondsen mogen niet worden verhandeld in Mexico.
SSGA SPDR ETFs Europe I Plc en SSGA SPDR ETFs Europe II Plc zijn beleggingsmaatschappijen met variabel kapitaal opgericht als fondsen met afzonderlijke aansprakelijkheid tussen de compartimenten volgens de wetten van Ierland en erkend door de Central Bank of Ireland conform de Europese verordening van 2011 over instellingen voor collectieve belegging in effecten. U moet het prospectus en de essentiële beleggersinformatie (KIID) met betrekking tot specifieke SPDR-ETF's aanvragen en zorgvuldig lezen alvorens u belegt. Voor meer informatie en het prospectus/KIID met de kenmerken, kosten en risico's van SPDR-ETF's kunt u nu een prospectus of KIID downloaden, of kunt u deze documenten verkrijgen bij uw financieel adviseur of bij uw lokale SSGA-kantoor.
De in de VS gevestigde SPDR-ETF's die op deze site worden vermeld, zijn enkel toegelaten voor commercialisering in het relevante EER-rechtsgebied conform artikel 42 van de AIFMD (zoals omgezet in nationaal recht van die lidstaat); of kunnen anderszins rechtmatig worden aangeboden of verkocht (inclusief op basis van een verzoek van een professionele/gekwalificeerde belegger). Enkele in de VS gedomicilieerde SPDR-ETF's die op deze site worden vermeld, zijn alternatieve beleggingsinstellingen in de zin van de richtlijn van de Europese Unie inzake beheerders van alternatieve beleggingsinstellingen (Richtlijn 2011/61/EU) (“AIFMD”). SSGA Funds Management, Inc. en State Street Global Advisors Trust Company zijn de beheerders van alternatieve beleggingsinstellingen (“BAB's”) van deze fondsen.
Alvorens u belegt, moet u de beleggingsdoelstellingen, risico's, vergoedingen en kosten van de fondsen in overweging nemen. Een prospectus met deze en andere informatie kunt u downloaden of aanvragen bij uw financieel adviseur. Lees het zorgvuldig alvorens te beleggen.
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