While it’s usually good news when an economy is on the upswing, it’s proved to be bad news for the emerging markets in 2013. While London’s FTSE 100 shot up by 20.9 percent and the S&P 500 gained an eye-popping 32.4 percent, the MSCI Emerging Markets Index actually lost 2.6 percent. This wasn’t a case of the emerging markets doing poorly from a fundamental perspective, but that the developed markets were doing so well.

As the US markets charged ever higher, the Fed began hinting that it might be time to start drawing the curtains on its bond buying in May 2013.That started the first of the “taper tantrums,” which began dragging down emerging market stocks and bonds. Many speculated that capital flows to the emerging world would reverse and borrowing costs would rise. Those fears only intensified when the Fed finally did pull the trigger, drawing down its monthly, $85 billion bond purchases by $10 billion per month.

While the Fed has stuck to its guns and continued tapering, Treasury yields have actually continued falling, down from slightly more than 3 percent at the beginning of the year to 2.46 percent, a new low for the year. That downward slope in interest rates has convinced investors we’re in a low-risk environment, which has given them the courage to pursue riskier investments in emerging – and even riskier frontier – markets, pushing those markets higher since March.

Sky high valuations on most developed nation equity markets have also helped to make lower-valued emerging markets, most of which suffered a broad sell-off this past winter, much more attractive. That’s particularly true as growth concerns have once again come to the fore in the developed world, with the US reporting that its gross domestic product actually declined by 1 percent in the first quarter. While that contraction is largely being blamed on harsh winter weather, it has called the sustainability of the recovery in question as wages and consumer spending have largely languished.

Elections, which can so often cause turmoil and uncertainty in many emerging market nations, have also proven to be a positive in recent weeks. As I wrote about a few weeks ago in Profiting from India’s Change of Control, the stunning victory by the Bharatiya Janata Party in Indian parliamentary elections has swept Narendra Modi into that country’s Office of the Prime Minister. Widely seen as a pro-business reformer, his ascension has clearly cheered investors who grew weary of the economic stagnation that was beginning to grip the country.

Indonesia will soon begin its round of elections, which will culminate July 9^th with the election of its next president. While the percent of undecided voters make the election too close to call, recent polls show Jakarta governor Joko Widodo leading the pack with 35 percent voter support, versus 23 percent for his closest competitor. On the day Widodo’s nomination was announced both the Indonesian stock market and currency rose. Having worked in the country’s property sector and ran a successful international business, he is viewed as having solid pro-business credentials.

With those tailwinds in place, the emerging markets have regained their luster, which was initially tarnished by the taper. That’s particularly true of income-oriented investments, which continue to benefit from historically low interest rates that continue to prevail across the advanced nations.

A Basket of Dividends

SPDR S&P International Dividend (NYSE: DWX) currently yields 6.3 percent, largely because of its broad exposure to Europe; 37.6 percent of this exchange-traded fund’s (ETF) $1.49 billion in assets are devoted to the region. Australia is the fund’s single largest country exposure at 22.2 percent, with the remainder spread across emerging market nations such as Israel, China, Turkey and South Africa.

The fund holds 121 positions and, as one would expect from a dividend-focused fund, financials figure largely in the portfolio at 24.5 percent of assets. More defensive sectors make up the largest share of holdings, with telecoms weighted at 16.6 percent, utilities at 14.5 percent and health care at 2.5 percent. As a result, in the event that volatility should strike once again the fund should hold up relatively well thanks to its conservative sector exposures.

Although the fund tracks 100 of the highest yielding common stocks in its coverage universe, it doesn’t just blindly invest in the companies with the highest yields. Since the fund’s portfolio is yield-weighted, its holdings tend to be considered “value” plays since they are typically beaten down for one reason or another, resulting in their higher yield. In order to avoid yield traps, portfolio companies must have a market cap greater than USD1.5 billion and meet minimum liquidity requirements. They must also show positive earnings growth and profitability over the trailing three-year period. The portfolio is rebalanced quarterly.

The ETF is slightly more volatile than the MSCI All Country World Index ex-US, with a three-year beta of 1.06. However, it has outperformed that benchmark index over the long-term on a total return basis thanks to the compounding effect of its attractive dividend yield. In the intermediate-term, given the fund’s heavy weighting to both the emerging markets and Australia, it appears set to continue riding the global wave in both emerging market and developed world stocks while handily beating the yields available in most of the stocks available in the markets of the advanced world.

With a low expense ratio of 0.45 percent and a high 6.3 percent yield, SPDR S&P International Dividend is a buy up to 60.