However, critics have cautioned that these new in-house ETFs come with risks, specifically their sampling methdologies. For instance, the Market Vectors Brazil Small-Cap ETF (NYSEArca: BRF) underperformed the iShares MSCI Brazil Small Cap Index Fund (NSYEArca: EWZS), which uses a MSCI Index, by 3.5% in 2011. The Van Eck offering excludes the smallest Brazilian components and includes others additional holdings the MSCI Index would not.
Additionally, some caution that providers could even tweak holdings and investors wouldn’t know why the investments are performing the way they do.
For more information on ETF indices, visit our indexing category.
Max Chen contributed to this article.