Emerging markets exposure is easy to find in ETF wrappers. But value-driven, dividend-focused, high-conviction emerging-market strategies? Not so much. Many widely held EM ETFs lean heavily into growth benchmarks, offer little in the way of income, and remain concentrated in large economies like China—potentially making them vulnerable to headline risk and macro volatility.
That’s where the Cullen Emerging Markets High Dividend Fund (ticker: CEMFX) stands apart. This actively managed mutual fund seeks to offer long-term capital appreciation and current income through a value-based, dividend-growth approach. And while it isn’t an ETF, CEMFX may still appeal to advisors who allocate primarily through ETFs but are looking for complementary strategies that are designed to capture stronger fundamentals, higher income, and better geographic diversification.
In an interview with The Wealth Advisor’s Scott Martin, Rahul Sharma, Portfolio Manager at Schafer Cullen Capital Management, discussed how CEMFX aims to deliver high-quality EM exposure by screening for undervalued dividend payers with growth potential—and why the fund’s disciplined process may have a distinct edge in today’s global environment.
A Value Discipline Built for Global Markets
Sharma joined Schafer Cullen in 2000 and helped launch the firm’s international and emerging markets equity businesses in response to growing client interest. Over the past 25 years, he has managed those strategies using the same investment philosophy that underpins Cullen’s long-standing U.S. value approach.
“We’re kind of well known for sticking to our style discipline,” Sharma says.
The firm’s process begins by screening for companies with low price-to-earnings (P/E) ratios, solid balance sheets, and sustainable earnings. But instead of limiting that framework to domestic equities, Sharma applies it across the emerging markets universe—where valuations are often lower and the pool of dividend-paying stocks is broader.
“Non-U.S. equities, including emerging-market equities, have been cheap for some time, particularly relative to the U.S.,” he says. “Now, you’re seeing a lot more earnings growth dynamics starting to come through, and probably most importantly, you’re seeing the dollar start to decline.”
For those looking to diversify away from U.S. assets, CEMFX aims to provide intentional exposure to undervalued markets with improving fundamentals—without relying on a passive index.
Where Many ETFs Fall Short, CEMFX Leans In
Many emerging-market ETFs are built around market-cap-weighted benchmarks like the MSCI Emerging Markets Index, which can often result in concentrated allocations to mega-cap Chinese tech firms or low-yielding state-owned enterprises. CEMFX, by contrast, screens for dividends, growth catalysts, and corporate governance quality—elements that rarely show up in passive EM exposure.
“The yield on the EM index is about double that of the S&P 500, and then our yield is even higher,” Sharma says. “Probably most impressively, the dividend growth has been the best in emerging markets compared to other developed markets, which is something that people don’t quite realize.”
The fund’s top holdings include Tencent (4.45%), Taiwan Semiconductor (4.14%), and China Construction Bank (3.91%). Typically, the portfolio holds 55–60 names across a diverse range of countries and sectors, seeking to pair income generation with long-term capital growth. While many EM ETFs offer exposure to companies like Tencent, Sharma and his team apply further filters around valuation, earnings growth, and shareholder alignment.
“Some people think that we’re just clustered in high-yielding stocks with no earnings growth,” Sharma says. “But we think our earnings growth is better than the overall market and that you could still get the yield. It’s just a great way to gravitate towards higher-quality companies—companies that are paying dividends, that care about shareholder returns, care about things like corporate governance.”
Six Times the Screening Power
One of the key differentiators of the Cullen approach is the depth and breadth of its screening process. Sharma emphasizes that when he applies a value screen across U.S. markets and emerging markets, the result is dramatically different.
“When we do the same screen in the U.S. as we do in emerging markets, we get about probably six times as many stocks in emerging markets that meet our value screening parameters,” he says.
The significantly broader universe of qualifying stocks in emerging markets allows Cullen to be highly selective, avoiding both speculative growth names and low-quality high yielders. Unlike broad index–based ETFs that can be forced to hold unattractive sectors, CEMFX’s active process enables it to target overlooked dividend growers across markets and industries.
“You can get a lot of exposure, for example, to tech stocks in places like Taiwan that are cheap and pay great dividends and that are quite exposed to big trends like AI,” Sharma says.
Pairing that kind of thematic growth exposure with dividend strength is uncommon in many ETF strategies—particularly those grounded in traditional value screens.
Avoiding Value Traps Through Country-Level Research
Instead of allocating based solely on market size, the CEMFX team incorporates systematic research to assess country-level risks and opportunities. That includes fundamental and geopolitical analysis designed to sidestep so-called value traps—markets that may screen as attractive on paper but carry deeper risks such as political instability, sanctions, or weak governance frameworks.
“We do a lot of top-down work and do a lot of country research to try to, first of all, learn about the strengths of countries, but also to limit exposure to countries that might be cheap, but they’re kind of cheap for a reason,” he says.
“It’s not just valuation, it’s a whole plethora of things that we’re doing,” Sharma explains. “Also, visiting the country—that’s very, very important. And we do a lot of geopolitical analysis as well, quite as important too.”
That kind of hands-on, country-specific diligence is often missing from broad-based EM ETFs. CEMFX may offer a more targeted, actively managed approach that incorporates macro risk analysis in ways index-tracking funds typically do not.
A Broader Opportunity Set in Today’s Market
Emerging markets are no longer a China-only story. Sharma sees strength across multiple regions—including markets that have historically been underappreciated.
“China is posting very good returns in the face of negative headline news,” he says. “Places like Taiwan are very well exposed to the AI trend. South Korea is doing a lot of reforms. And now, even in places like South America, markets like Brazil and Mexico are performing well.”
He also flags the United Arab Emirates as an emerging market with attractive fundamentals and upside potential. At the same time, Sharma is cautious on Southeast Asia, where some countries are under pressure from tariffs and political volatility. India, once a major overweight, remains a long-term opportunity, but the fund has reduced exposure on valuation concerns.
Understanding where Sharma sees strength—and where he exercises caution—helps contextualize CEMFX’s positioning. It suggests the fund may benefit from a more diversified base of contributors to performance, rather than relying on one or two dominant countries—which can be especially useful in ETF-heavy portfolios where country-level control is limited.
CEMFX might serve as a precision tool to complement ETF core holdings—especially for those seeking more income, greater selectivity, and active country rotation.
Currency as a Catalyst
The U.S. dollar’s strength has long been a headwind for emerging markets. But Sharma believes that cycle may finally be turning—and that a prolonged period of dollar weakness could enhance returns for dollar-based investors in foreign equities.
“The dollar, it’s off to its worst start in 50 years,” Sharma says. “Similar to the periods in the 2000s, we might be in the midst of a meaningful decline in the dollar over the next four or five, seven years.”
Currency diversification is especially important in a high-inflation environment where global supply chains and consumer costs are sensitive to foreign exchange swings. For Sharma, dividend-paying EM equities are one of the most efficient ways to hedge that exposure.
“If a company raises its dividend by 5%, but then the U.S. dollar depreciates by 5% versus the currency that the company’s denominated in, you get 10% dividend growth,” he says. “It’s an excellent way to get that diversification.”
And for clients consuming imported goods, outsourcing overseas, or traveling abroad, Sharma argues that currency exposure isn’t just a portfolio issue—it’s a lifestyle one.
“I think people forget about how much they enjoy international products too, whether it be luxury goods from Italy or France or trips to Italy. Or, if you’re a corporate client outsourcing IT needs to places like India, when the dollar goes down, all those things get more expensive,” he points out. “So, it’s important to have that diversification so you can maintain your cost of living and keep enjoying life like you have been.”
A Complement, Not a Replacement
CEMFX has delivered strong returns over multiple time frames: 11.95% year-to-date, 16.87% over three years, and 13.09% over five years through June 30, 2025. While many advisors default to passive ETFs for EM exposure, those returns suggest active dividend-focused strategies like CEMFX may be worth a closer look—especially as both more countries rebound and inflation trends shift.
“I do not think it’s too late,” Sharma says. “There’s a lot of historical precedents to say that whether you look at the duration of typical rallies of non-U.S. equities or the magnitude, we’re still probably in the second or third inning even after the rally we’ve seen year to date.”
For advisors seeking differentiated exposure, CEMFX seeks to offer a way to target income, discipline, and active stock selection in a part of the market where index-based solutions often fall short.
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Additional Resources
- Contact: Jeff Cullen, Jeffcullen@schafer-cullen.com
- Cullen Capital Management Website
- CEMFX Fact Sheet
- CEMFX Summary Prospectus
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Disclosures
The Fund’s holding and sector allocations may change at any time due to ongoing portfolio management. References to specific investments should not be construed as a recommendation by the Fund or Cullen Capital Management to buy or sell the securities.
Mutual fund investing involves risk. Principal loss is possible. Foreign investments involve additional risks, which include currency exchange-rate fluctuations, political and economic instability, differences in financial reporting standards, and less-strict regulation of securities markets. Mid cap securities are subject to greater investment risk as compared to large cap securities.
The MSCI Emerging Markets Index is an unmanaged market capitalization-weighted index based on the average weighted performance of widely held common stocks. One cannot invest directly in an index.
To determine if the Fund is an appropriate investment for you, carefully consider the fund’s investment objectives, risk, and charges and expenses. This and other information can be found in the fund's prospectus, which can be obtained by visiting https://www.cullenfunds.com/. Please read the prospectus carefully before investing.
The Cullen Emerging Markets High Dividend Fund is distributed by Paralel Distributors LLC.
