Core Insights - The S&P High Yield Dividend Aristocrats Index has expanded to 155 holdings, adding eight companies that have raised dividends for at least 20 consecutive years [1] - The State Street SPDR S&P Dividend ETF (SDY) and the ALPS Sector Dividend Dogs ETF (SDOG) have shown different performance metrics over the past year, with SDY returning 10.7% year-to-date and 18.5% over one year, while SDOG returned 11.1% year-to-date and 20.3% over the same period [1] Fund Performance - SDY focuses on companies with a long history of dividend growth, while SDOG selects the five highest-yielding stocks from each of 10 sectors [1] - SDY includes 102 stocks from the S&P 500, 38 from the S&P MidCap 400, and 15 from the S&P SmallCap 600, with a current yield of 2.60% and annual expenses of 0.35% [1] - SDOG maintains equal weightings across sectors, with a yield of 4.03% and annual expenses of 0.36% [1] Sector Exposure - Energy stocks have gained 19.9% year-to-date, while technology stocks have fallen by 2.7%, contributing to the performance gap between SDY and SDOG [1] - SDOG's balanced approach allows it to benefit from energy sector gains, holding stocks like Chevron Corp. and ConocoPhillips, while SDY has heavier weightings in industrials, consumer staples, and utilities [1] - Among SDY constituents, approximately 33% have raised dividends for 20 to 24 years, and 32% have done so for 45 years or more [1]

Core Insights - Emerging markets (EMs) were the best-performing major regional indices in 2025, with the MSCI Emerging Markets index rallying over 30% in U.S. dollar terms, surpassing the S&P 500 and other developed market benchmarks [1] - The positive outlook for EMs is expected to continue into 2026, driven by macro developments, attractive valuations, and exposure to artificial intelligence (AI) [1] Investment Trends - Broad EM ETFs reported strong returns, with many achieving approximately 30%+ for 2025; notable funds include iShares Core MSCI Emerging Markets ETF (IEMG) with $18 billion in new inflows and Vanguard FTSE Emerging Markets ETF (VWO) with $8.5 billion [2] - The Avantis Emerging Markets Equity ETF (AVEM) also performed well, bringing in $6 billion in net inflows last year [2] Active Management Strategies - Enhanced strategies like the ALPS Emerging Sector Dividend Dogs ETF (EDOG) have gained traction, returning roughly 29% last year by focusing on high-yielding stocks [3] - The Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM) has crossed $1 billion in assets, utilizing a multifactor approach across over 700 holdings to provide a systematic factor overlay [4] Growth Drivers - Key contributors to EM returns include China, South Korea, and Taiwan, with Taiwan stocks rising 26% in local currency and 40% in U.S. dollars, while South Korea saw gains of 75% in local currency and nearly 100% in U.S. dollars [5] - Indian equities underperformed with a 9% return, contrasting with previous years of strong gains, but are expected to rebound as earnings stabilize [5] Market Dynamics - Emerging markets are trading at approximately 15 times forward earnings, making them relatively inexpensive compared to the S&P 500, which trades at around 22 to 23 times forward earnings [5] - Declining interest rates and a weakening dollar are favorable conditions for EMs, potentially enhancing global risk appetite [5] Future Outlook - The case for EMs in 2026 is supported by faster growth, cheaper valuations, and significant exposure to global AI supply chains, positioning EM ETFs as a core allocation opportunity rather than a tactical trade [6]