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A simple strategy to make big income and profits in emerging markets


From Frank Holmes of U.S. Global Investors:

Four decades ago, the “Dogs of the Dow” strategy was born. It’s a simple concept where investors hold the ten highest dividend-yielding companies of the Dow Jones Industrial Average and rebalance annually. This strategy has paid off for the devoted “Dogs” investor: Since 1972, it has beaten the overall index by 3 percent, says UBS Investment Research.

At U.S. Global, we apply a similar approach to find growth and income in the faster-growing emerging markets. We believe choosing the highest dividend-paying companies located in developing countries helps investors capture the significantly higher growth potential, while earning income in the form of historically outsized dividends.

We call these top dogs our “Show Dogs of the World,” and they make up many of the holdings in our Global Emerging Markets Fund (GEMFX), the China Region Fund (USCOX), and the Eastern European Fund (EUROX).

This approach looks promising, especially after reviewing research done by UBS. Its new “Dogs of GEM” investment strategy picks 20 of the highest-yielding companies among the 800 stocks of the MSCI Emerging Markets Index (MXEF) and refreshes the list annually.

Looking back five years, UBS finds the success rate is “striking,” with its portfolio of high-yielding emerging-markets stocks…

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