Emerging market assets provide investors with the opportunity to capture the high growth potential of a developing economy. In an attempt to set itself apart from the competition, Emerging Global Advisors launched two new exchange traded funds that follow emerging countries in their early stages of economic progression.
According to a press release, the EGShares Beyond BRICs ETF (NYSEArca: BBRC) and the EGShares Emerging Markets Domestic Demand ETF (EMDD) will provide investors access to less mature emerging market countries and sectors.
Over 90% of emerging market equity ETF assets track the MSCI Emerging Market Index or other similar indices that are dominated by countries further along in their economic development.
“EGShares BBRC and EMDD ETFs represent alternatives to those broad benchmarks which typically reflect the most mature countries and sectors in emerging markets, Marten Hoekstra, CEO of Emerging Global Advisors, said in the press release. “To attempt to meet the need for exposure to less mature countries, we created the EGShares Beyond BRICs ETF. To meet the need for exposure to less mature sectors, we created the EGShares Domestic Demand ETF.”
BBRC country allocations include: South Africa 18.7, Mexico 18.5%, Malaysia 15.2%, Thailand 13.9%, Indonesia 12.1%, Turkey 6.5%, Chile 5.0%, Colombia 4.0%, Poland 3.4%, Peru 1.7% and Philippines 1.0%. The ETF has a 0.85% expense ratio.
“While [emerging market] equities are generally more volatile than [developed market] equities, beyond BRIC markets may compare favorably to other emerging markets,” according to a EGShares research note.
EMDD country allocations include: Mexico 24.8%, China 14.9%, India 13.9%, South Africa 13.0%, Brazil 13.0%, Indonesia 6.5%, Malaysia 4.2%, Russia 3.4%, Thailand 2.4%, Philippines 1.5% and Chile 1.0%. The fund follows consumer staples, consumer discretionary, telecom, utilities and health care sectors – these sectors are believed to garner a greater portion of revenue from local and infra-emerging-market sales. EMDD has a 0.85% expense ratio.
Individual stock components within each ETF will be limited to 4.9% at the time of purchase.
For more information on new product launches, visit our new ETFs category.
Max Chen contributed to this article.
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.