6 min readBy Beqa Bumbeishvili ETF Insider
How does the SDEM ETF work?
The SDEM ETF is a specialized investment fund that focuses on a specific sector. This exchange-traded fund offers investors exposure to a range of companies in this sector.
WisdomTree, as the issuer of the DEM (WisdomTree Emerging Markets High Dividend Fund), adopts a passive management approach, striving to track the performance of its underlying index. The fund predominantly utilizes a representative sampling strategy, investing at least 95% of its assets in component securities of the index or those with substantially similar economic characteristics. The index itself, a fundamentally weighted index, selects high dividend-yielding common stocks from the WisdomTree Emerging Markets Dividend Index, focusing on emerging market nations across the globe and emphasizing companies with significant dividend payouts. Weighting within the index is based on dividends paid over the prior annual cycle, with a cap of 5% on individual security weightings and 25% on exposures to any one country or sector, except for real estate, capped at 15%. WisdomTree, as the index provider, utilizes the Global Industry Classification Standard to categorize companies within sectors, ensuring broad sector representation. Notably, as of June 30, 2023, the index displayed significant exposure to Taiwan and China, although geographic exposure may vary over time. Thus, WisdomTree's DEM issuer reflects a commitment to passive indexing and targeted exposure to high dividend-yielding emerging market securities, guided by a systematic and diversified approach.
DEM (WisdomTree Emerging Markets High Dividend Fund) Dividend seeks to provide investors with exposure to a diversified portfolio of high dividend-yielding companies in emerging markets. By tracking the WisdomTree Emerging Markets Dividend Index, DEM Dividend offers an opportunity to invest in companies that have a history of consistent and substantial dividend payouts. With a focus on fundamentally weighted selection criteria, the fund targets companies with strong dividend-paying records, ensuring that investors can potentially benefit from both income generation and capital appreciation. Additionally, DEM Dividend's methodology includes sector and country caps to maintain diversification and mitigate concentration risks. As a result, DEM Dividend presents itself as a compelling option for investors seeking income and growth potential within the dynamic landscape of emerging market equities.
DEM (WisdomTree Emerging Markets High Dividend Fund) Tracking is designed to replicate the performance of its underlying index, the WisdomTree Emerging Markets Dividend Index, employing a passive management strategy. By utilizing a representative sampling approach, the fund aims to mirror the risk, return, and other characteristics of the index as a whole. With at least 95% of its assets invested in component securities of the index or those with substantially similar economic characteristics, DEM Tracking provides investors with a cost-effective means of gaining exposure to high dividend-yielding companies in emerging markets. The index itself is constructed using specific eligibility criteria, such as dividend yield, market capitalization, and trading volume, ensuring that selected securities reflect the diverse landscape of emerging market nations. Through diligent tracking mechanisms, DEM Tracking endeavors to accurately reflect the performance of its benchmark index, offering investors a transparent and efficient investment vehicle for accessing emerging market dividends.
DEM (WisdomTree Emerging Markets High Dividend Fund) Correlation aims to provide investors with exposure to emerging market equities while managing correlation risks. The fund's investment strategy seeks to minimize correlation with traditional equity markets by focusing on high dividend-yielding companies in emerging markets. By tracking the WisdomTree Emerging Markets Dividend Index, DEM Correlation selects companies based on their dividend-paying history and other fundamental factors, rather than market capitalization alone. This approach can potentially reduce correlation with broader market movements, offering diversification benefits to investors' portfolios. Additionally, DEM Correlation's methodology includes sector and country caps, further diversifying risk exposures. Through its systematic investment approach, DEM Correlation provides investors with a tool to potentially reduce correlation risk while participating in the growth potential of emerging market dividends.
DEM Sector focuses on providing investors exposure to various sectors within emerging markets while emphasizing high dividend-yielding companies. By tracking the WisdomTree Emerging Markets Dividend Index, DEM Sector seeks to capture the performance of companies across sectors such as communication services, consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, real estate, and utilities. This diversified approach ensures broad sector representation within the fund's portfolio. DEM Sector's methodology, which incorporates sector and country caps, aims to mitigate concentration risks while offering investors the potential for income generation and capital appreciation. With its systematic investment strategy, DEM Sector presents investors with an opportunity to participate in the growth potential of emerging market sectors while benefiting from the dividends provided by high-quality companies.
DDEM Exposure provides investors with targeted exposure to emerging markets through its systematic investment approach. By tracking the WisdomTree Emerging Markets Dividend Index, DEM Exposure focuses on high dividend-yielding companies across a diverse range of emerging market nations and sectors. The fund's methodology, which includes sector and country caps, ensures that investors gain exposure to a balanced mix of sectors and geographic regions while mitigating concentration risks. Additionally, DEM Exposure's emphasis on dividend-paying companies offers investors the potential for both income generation and capital appreciation. With its transparent and disciplined investment strategy, DEM Exposure presents investors with an opportunity to access the growth potential of emerging markets while managing risk through diversified exposure.
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