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]

Core Insights - Emerging markets equities and related ETFs have significantly outperformed U.S. stocks in 2025, shedding previous underperformance [1] Group 1: ETF Performance - The ALPS Emerging Sector Dividend Dogs ETF (EDOG) has increased nearly 15% year-to-date and is expected to continue its success into 2026 due to the reduction of dilution in emerging markets [2][5] - The cessation of dilution in emerging market equity indices allows companies to refocus on shareholder rewards, which is a key focus for EDOG [3][4] Group 2: Shareholder Rewards - Companies in emerging markets, particularly in China, are shifting towards buybacks and dividends, with buybacks hitting record highs last year, doubling from the previous year [5][6] - The trend of returning cash to shareholders is expected to benefit ETFs like EDOG, as companies prioritize shareholder rewards [4][5] Group 3: ETF Structure and Risk Management - EDOG's equal weighting of sector exposures may appeal to investors concerned about concentration risk in cap-weighted emerging markets indices [7] - The ETF mitigates geographic risk associated with cap-weighted emerging markets ETFs, which often allocate a significant portion of their portfolios to Chinese stocks [7]

Core Insights - Emerging market (EM) stocks are experiencing a resurgence in 2025, with growth sectors like consumer internet and technology leading the way, but value-oriented EM equities are also performing well amid this growth rally [1] - The ALPS Emerging Sector Dividend Dogs ETF (EDOG) has increased nearly 12% year-to-date, highlighting its strong performance [1] Performance Metrics - EDOG boasts a trailing 12-month dividend yield of 6.24%, which is more than double that of the MSCI Emerging Markets Index, making it a standout in terms of yield among traditional broad market ETFs [2] - The overlap by weight between EDOG and the MSCI Emerging Markets Index is only 1%, allowing for diversification without significant holdings-level overlap [2] Dividend Trends - The dividend landscape in emerging markets is improving, with dividends and share buybacks becoming more common in some developing economies, which is positive for EDOG investors [3] - The Asia-Pacific region is noted for enhancing shareholder rewards, with the top five country weights in EDOG being Asian nations, making it appealing for long-term investors seeking diversification [4] Investment Appeal - Dividends signal company health and cash generation capabilities, making them attractive to investors, especially in emerging markets where quality and value are prioritized [5] - EDOG mitigates risk by equally weighting its sector exposures, reducing dependence on a few sectors for income, and its quality focus ensures that dividend payers can sustain and potentially grow payouts over time [6]