Smart Beta Fuels Best Performing Emerging Market ETFs

October 24, 2016

Smart-Beta ETFs Dominate Top 3 Spots

Interestingly, the top three best-performing emerging market ETFs in the total market segment this year are all smart-beta funds. They are:

 

Charts courtesy of StockCharts.com

 

FNDE, too, picks and weights stocks based on fundamental factors including sales, cash flow and dividends/buybacks. The fund has $715 million in AUM.

SDEM, meanwhile, offers an equal-weighted take on this segment, with a portfolio that owns only about 50 stocks based on high dividend yield. SDEM, which is 1 ½ years old, has only $3.7 million.

Cost Consideration

It's important to note that with the exception of EEM, investors are paying more for these smart-beta exposures. A ranking of these ETFs overall costs, including expense ratio and average trading spread, shows just how much price difference there is in this segment of ETFs:

  • PXH costs 0.49% in expense ratio, and trades with an average spread of 0.09%. Total cost of ownership is about $58 per $10,000 invested.   
  • FNDE costs 0.47% in expense ratio, and trades with an average (wider) spread of 0.14%. Total cost is about $61 per $10,000 invested.
  • SDEM costs 0.65% in expense ratio, and trades with an average spread (even wider) of 0.31%. Total cost is about $96 per $10,000 invested.

By comparison, EEM has a total cost of about $72 per $10,000 invested, while VWO clocks in at about $18 per $10,000 invested and IEMG at $16 per $10,000 invested.

Contact Cinthia Murphy at [email protected]

 

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