As the popularity of exchange traded funds (ETFs) rise, one has to wonder how much influence they have on mutual funds. Take for instance the popularity of country specific ETFs and the recent merger of Fidelity foreign mutual funds. Management companies are looking for less specialization and more economies of scale reports Chuck Jaffe for MarketWatch.com.
Fidelity is folding it’s Nordic Fund (FNORX) into Fidelity Europe Fund (FIEUX) and Fidelity Advisor Korea (FAKAX) into Fidelity Advisor Emerging Asia (FEAAX). Shareholders of the Nordic and Korea fund will now have a more widespread exposure. The objective of this strategy is to get more diversified and similar funds may do the same in the near future, writes Joe Morris of Ignites.
For investors who don’t want the broad diversification of Asia over Korea, they don’t have much of a choice if they are in the Fidelity Korea Fund. In using ETFs they can choose country specific iShares MSCI Korea (EWY) or if they desire one of the Asian ETFs with some exposure to Korea, such as BLDRs Emerging Markets 50 ADR (ADRE) with 12.7% in Korean companies.
For full disclosure, some of Tom Lydon’s clients own ADRE.
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