New Asian-related exchange traded funds (ETFs) could be coming soon. Standard & Poor’s (S&P) has announced the launch of a new index covering Southeast Asia. Emerging markets in Asia have been on fire lately, so this new index aims to capitalize on that trend. The S&P Southeast Asia 40 Index covers the Philippines, Indonesia, Malaysia and Thailand; Asian countries the S&P refers to as "tigers," says Heather Bell for Index Universe.
However, this isn’t the first index to cover Southeast Asia. Currently available is the FTSE/ASEAN 40 Index that launched in 2005, which covers Indonesia, Malaysia, the Philippines, Thailand and Singapore.
The most obvious difference between the two indexes is that the FTSE/ASEAN 40 Index includes Singapore. Twelve stocks and more than 46% of the index’s market capitalization is invested in Singapore. In addition to excluding Singapore, the new S&P index uses a modified market capitalization weighting approach that limits individual stocks to 10% of the index and individual countries to 40% of the index. Basically, if investors are looking to capture the performance of the ASEAN region, the FTSE index might be more appropriate. However, if investors are strictly looking for exposure to Southeast Asian emerging markets, the S&P index might be more practical.
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