Franklin Emerging Market Core Dividend Tilt Index ETF (DIEM) seeks to track an index that measures dividend-paying stocks from emerging market countries, with higher weightings assigned to companies offering attractive dividend yields. This income-focused emerging markets equity ETF targets dividend-generating companies across developing economies in Asia, Latin America, and other emerging regions.
How It Works
DIEM uses a dividend-tilt weighting methodology that overweights emerging market stocks based on their dividend yield relative to the broader market, while maintaining diversification across countries and sectors. The fund passively tracks its benchmark index through systematic rebalancing to maintain dividend-focused allocations. Holdings span multiple emerging market countries including China, India, Brazil, and others, with currency exposure unhedged to the U.S. dollar, amplifying both returns and volatility from foreign exchange movements.
Key Features
- Combines emerging markets growth potential with dividend income focus, targeting higher-yielding stocks within developing economies
- Zero expense ratio provides cost-effective access to dividend-tilted emerging markets exposure compared to actively managed alternatives
- Unhedged currency exposure allows investors to benefit from emerging market currency appreciation against the dollar
Risks
- This ETF can lose significant value during emerging market selloffs, potentially declining 40-60% during crisis periods like 2008 or 2020
- Currency fluctuations can amplify losses when emerging market currencies weaken against the dollar, adding 10-20% additional volatility annually
- Dividend cuts during economic downturns reduce both income and share price, as high-yield stocks often face sustainability questions
Who Should Own This
Best suited for income-seeking investors with high risk tolerance and 7+ year time horizons willing to accept significant volatility for dividend income and emerging markets growth potential. Should represent 5-15% of a diversified portfolio as a satellite holding. Appropriate for investors seeking geographic diversification beyond developed markets while generating current income.