Emerging Global Advisors (EGA) has launched the EGShares EM Dividend High Income ETF (EMHD), an exchange-traded fund designed for income-oriented investors.
EMHD tracks an index that has a dividend yield of 8.8 per cent (as of 31 July 2013) and screens for emerging market (EM) companies that have consistently generated high income for their shareholders.
“The rise of emerging market-based multinationals has greatly expanded the number of companies with the capacity to sustain high dividend payments,” says Marten Hoekstra, chief executive of EGA. “EMHD applies our firm’s emerging market expertise to create a high income solution that can provide investors with a global approach to diversifying income streams.”
EMHD tracks the FTSE Equal Weighted Emerging All Cap ex Taiwan Diversified Dividend Yield 50 Index. EGA and FTSE collaborated to design an index that seeks to provide a higher dividend payout relative to other widely used EM dividend indices. The equally-weighted index measures the stock performance of the 50 highest-yielding, liquid EM equity securities in the FTSE Emerging All Cap ex Taiwan Universe, excluding the least capitalised dividend-paying companies. As a result, the index is designed to deliver a broad basket of securities across EM countries that are screened for high dividend yield and quality. The index also considers both dividend coverage and consistency. To ensure diversification, the number of stocks per industry and country is limited to 10.
EGShares EM Dividend High Income ETF tracks this index and trades on NYSE Arca under the ticker symbol EMHD. The ETF is passively managed and does not use options, swaps or other derivatives in its portfolio. The fund is designed to pay dividends monthly.
