For those that are more conservative with their emerging market exposure, staying with a broad-based international dividend play may be better suited to your tastes.
IDV is the path that we have chosen for clients in our Strategic Income portfolio as a small allocation to high yield stocks overseas.
Another fund that I favor is theSPDR S&P International Dividend ETF (DWX).
DWX has greater overall exposure to emerging markets than IDV, although it is capped within the index at 15%.
It also has much more of its portfolio in energy stocks through a larger allocation to Canadian equities. A resurgence in the energy sector would likely cause DWX to outperform its peers.
The Bottom Line
International dividend ETFs can be an attractive option to boost the yield of your portfolio alongside instant diversification in the global marketplace.
Emerging market dividend ETFs offer a high risk, high reward proposition that may ultimately prove to be a successful bet for aggressive income seekers looking to catch the turn.
When selecting a region or asset allocation that makes sense for your goals, it’s always smart to start with small allocations that you can add to over time.
This will allow you to the opportunity to average into an attractive cost basis or provide more flexibility to cut bait if the trend falls out of favor.
This article is brought to you courtesy of David Fabian from FMD Capital Management.