High Yield International Equity ETFs

Trawling through a list of the highest yielding ishares funds on the market I have selected the 13 highest yielders and estimated the expected annual returns of holding these investments. The list is weighted towards European, Asian and Pacific funds. I haven't included specialist high yield funds such as Europe High Yield or US Value as assigning growth rates to these is problematic as they often contain ageing or dying companies that pay high yields and have low or negative growth rates. The funds chosen are all broad country or region funds where a growth rate for that area can be used as an approximation of the outlook for its companies (in many cases this will be conservative as companies in developed markets such as the USA or Europe will be global corporations and have significant interests in more emerging markets with higher growth prospects).

Below is a table showing the top 13 highest yielders in order of current dividend yield.

Country/Region	Div yield	IMF growth forecast	PE ratio	Estimated Return
Spain	12.49%	-0.85%	8.2	14.04%
New Zealand	6.92%	2.75%	14.8	6.98%
Belgium	6.15%	0.40%	11.8	6.65%
Poland	5.83%	2.90%	8.8	9.78%
Australia	5.20%	3.25%	11.5	7.91%
EM East Europe	4.91%	2.40%	5.0	8.61%
Pacific/Asia ex Japan	4.61%	3.29%	12.1	6.89%
Europe	4.56%	0.30%	9.8	6.86%
Italy	4.04%	-1.10%	7.7	5.64%
Taiwan	3.98%	4.15%	12.9	6.06%
Malaysia	3.80%	4.55%	14.4	4.97%
Singapore	3.79%	3.30%	12.4	5.84%
UK	3.79%	1.40%	10.0	6.59%

Ordered by estimated returns gives:






(I've colour coded the funds; Red=Asia, Shades of Blue=Europe and surrounding areas, Orange=Australia & New Zealand)

Spain is top but its current dividend yield is not covered by its earnings so looks unsustainable. It's also heavily weighted towards financial stocks (c. 40%).

Poland is also heavy on financial stocks with about 40% of its market. The East European fund would be an energy play with 46% of its market in energy stocks.

Australia is a whopping 48% financials which could prove dangerous. New Zealand is surprisingly diversified with telecoms making 23% and finance stocks accounting for less than 10% of its market. The small size of New Zealand would make it more of a risky investment.

Price action for New Zealand also looks positive having broken the 100 day high in March and May and remained above the 100 day low in the recent market weakness. Incidentally only 2 funds out of 13 in the list remained above their 100 day lows, the other fund being Singapore.