This Emerging Markets ETF puts Russia on the back burner


JThese days, the less exposure an emerging markets exchange-traded fund has to Russian equities, the better.

the ALPS Emerging Sector Dogs ETF (NYSEArca: EDOG) is a prime example of an emerging market ETF that, despite being passively managed, reacted quickly to significantly reduce its exposure to Russia as that country ignited a war with neighboring Ukraine.

EDOG, which turns eight later this month, tracks the S-Network Emerging Markets Index. All Alerian S-Network indices have removed “all Russia-related index components from all Alerian S-Network equity indices effective from the opening on Monday, March 7, 2022”, according to the provider. clues.

As of March 10, EDOG’s exposure to Russia was just 0.43%, making that country by far the smallest of the dividend fund’s 15 geographic allocations. South Africa is the largest with 13.53%, according to ALPS data.

“After the removal of Russia-related index components from all indices, Russia-related index components will not be eligible for inclusion in any Alerian S-Network Global Equity indices until that an additional timeline for re-inclusion be agreed with the Alerian S-Network Index Committee,” the index provider adds.

The withdrawal of Russian stocks from EDOG underscores the seriousness of the West’s economic sanctions against Russia and the impact of these measures on the country’s economy. For years, Russia has been one of the biggest emerging market dividend payers, due to its plethora of state-owned banks and energy companies.

The Kremlin has often weighed in on these companies to maintain or even increase dividends, making Russia a logical inclusion in EDOG. Today, EDOG is yielding 2.96%, nearly double the dividend yield of the MSCI Emerging Markets Index.

Even with the removal of Russian stocks, EDOG maintains a 13.35% weighting to energy stocks – its largest sector allocation – confirming that the fund is positioned to continue to capitalize on rising oil prices. And even with the Russian calamity, EDOG has beaten the MSCI Emerging Markets Index by 100 basis points year-to-date.

Other emerging market dividend ETFs include ProShares MSCI Emerging Markets Dividend Growers ETF (CBOE: EMDV)the iShares Emerging Markets Dividend ETF (DVYE)and the WisdomTree Emerging Markets Equity Income Fund (NYSEArca: DEM).

For more news, insights and strategy, visit the ETF Building Blocks channel.

Learn more at ETFtrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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