Our series of internationally based income funds continues this week with an examination of the SPDR S&P Global Dividend ETF (WDIV). Some overseas markets have been performing well this year, while others have lagged, but even the markets less favored in the current climate may see a change of fortune.
If you’re willing to take the risk of investing in a sector of the market that still is dealing with the surprise Brexit vote in which U.K. citizens chose to leave the European Union, then buying shares in a dividend-oriented overseas fund may be a good way to hedge out some of the inherent risk. The dividend aristocrat companies consistently raise their payouts and give the fund a reliable and growing source of income.
In addition, this fund still has some weighting in U.S. companies. In fact, the United States is the country that is home to more positions in WDIV than any other but only by a slim margin. So, WDIV offers geographic diversification that prevents overweighting in high-risk countries.
It should come as no surprise, in light of the strong performance of American equities during the past few months, that this international fund underperformed the S&P 500 in the last year, with a 1.52% gain compared to 4.83% for the S&P, without including dividends. However, that gap is narrowed when we consider the power of continuous dividend payments. WDIV offers a dividend yield of more than 4% in yield at present.
Total assets for this fund are only $77 million at this time. This means that it is below my recommended threshold for investment, but its strategy is one that is worth bringing to your attention. The expense ratio currently resides at 0.40%, and you can see the recent performance for WDIV in the chart below.
This fund maintains a stable of about 100 holdings. Top positions include Williams Companies Inc., 2.91%; MTN Group Ltd., 2.65%; Enbridge Income Limited Holdings Inc., 1.97%; Fortum Oyj, 1.89%; and Foschini Group Ltd., 1.89%. The top 10 holdings of this fund make up 19.78% of its total investments. The greatest allocations by country are in the United States, Canada and South Africa, but 21 countries are represented in total.
As diversified international funds go, there are a number of interesting strategies to consider. Before you choose the one that is right for you, you may find researching the SPDR S&P Global Dividend ETF (WDIV) to provide a strong educational foundation.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.