10 Sectors, 15 Countries; New Emerging Markets ETF Lands
July 23rd at 11:00am by Tom Lydon
Emerging Global Shares Dow Jones Emerging Markets Titans Composite ETF (EEG) will be the provider’s latest addition to the ETF marketplace. The new fund is based on the Dow Jones Emerging Markets Sector Titans Composite 100 Index. It includes 100 companies across 10 industries and 15 emerging markets.
This ETF marks the third offering from the new provider. The first two funds launched in late May:
- EGS Emerging Markets Energy Fund (EEO) tracks a basket of 30 of the largest emerging market companies within the oil and gas industry in 13 countries. The top country weightings are Russia (36.3%), India (18.9%), China (16.8%) and Brazil (9.5%).
- EGS Emerging Markets Metals & Mining Fund (EMT) tracks a basket of the 30 largest emerging market companies in the metals and mining sectors within nine countries. The top country weightings are South Africa (30.9%), Brazil (23.2%), China (16.5%) and Russia (13.2%).
Emerging Global Advisors Chief Executive Officer Bob Holderith says that so far, they’re pleased with how the funds are doing. “We always want more, but we’re comfortable with where we are,” he says. EMT and EEO have attracted about $14 million in assets in their slightly more than two months on the market.
The new fund does have a heavy weighting in BRIC countries (Brazil, Russia, India and China) because, as Holderith points out, much of the market cap in emerging markets is centered in those four countries. In addition to that, the fund has weightings in some other promising emerging markets, including Mexico and South Africa.
Excluded from the index are countries such as Taiwan, Korea and Israel, which are now commonly viewed as developed. “If you’re looking for an emerging market pure-play, you would not want those three,” Holderith says.
Holderith feels that interest in emerging markets should continue to expand. “It’s a 25-year growth story in its sixth year.” The positive growth outlook for emerging markets goes hand-in-hand with the changing demographic picture in these countries. Holderith notes that in most of these countries, there’s a huge young population, all looking for the “Western experience”: cell phones, iPods, dining out and more.
Oil and gas get the top weighting in the fund, with 30.8% of assets. That’s followed by financials (22.1%), telecommunications (11.6%) and basic materials (9.3%).
Countries covered in the index include China Offshore (21.8%) and Brazil (19.7%) to Chila (2.3%) and Indonesia (1.5%). The expense ratio is 0.75%.
For more stories on emerging market ETFs, visit our emerging market category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.