In an effort to give investors more investment options, Emerging Global Shares has announced that it will launch the first emerging market sector-based exchange traded funds (ETFs), but will they be a success?
The firm plans to launch 12 passively managed ETFs that track the Dow Jones Emerging Markets Titan Composite Index and will be the first to grab the 30 best companies across all emerging market countries. They will include the Consumer Services Titan Index Fund, Oil and Gas Titans Index Fund, Financials Titans Index Fund, Health Care Titans Index Fund, Industrials Titans Index Fund, and will carry expenses of 0.85%, states Fund Action.
The distinguishing difference between these new ETFs and the ones that are already in existence is diversification and sector-specific concentration. The ETFs that are currently in use are country ETFs, allowing an investor to gain exposure to certain sectors that they like in a specific market, like Brazil or China, but also includes the excess baggage of the country’s ETF.
Morningstar says the downside of the new ETFs is timing – they may suffer because of current market conditions. At the end of the day, the ultimate factor determining the success of these ETFs will be investor confidence.
The future of these ETFs is hard to determine, however, if developed countries can pull themselves out of this economic mess, then emerging markets should be able to as well.
These funds are expected to be out in early 2009.
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.