State Street’s (NYSE: STT) State Street Global Advisors unit, the second-largest U.S. provider of exchange traded funds, will introduce the SPDR MSCI Beyond BRIC ETF (NYSEArca: EMBB) today.
The BRIC nations – Brazil, Russia India and China – have, since the BRIC acronym was coined over a decade ago, been the primary destinations for emerging markets investors. That includes investors using both diversified and single-country ETFs. Today, the BRIC quartet represents over 40% of the MSCI Emerging Markets Index, according to State Street. [Beyond BRIC ETF Comes to Town]
The BRIC countries have been significant drivers of performance among emerging markets in the past, but have taken on many of the characteristics of developed economies over the last decade. Consequently, correlations between BRIC indices and developed market indices are growing,” said James Ross, senior managing director and global head of SPDR ETFs at SSgA, in a statement.
“In providing targeted exposure to countries in the next tier of emerging markets, the SPDR MSCI Beyond BRIC ETF is a compelling solution for investors seeking to diversify their international allocation in economies that are poised for growth.”
While the BRIC nations maintain dominant positions in a plethora of emerging markets ETFs, the equity markets in those countries, Brazil in particular, have struggled this year. That combined with large allocations to the BRIC countries and Taiwan and South Korea in some diversified developing world ETFs has prompted investors to consider other emerging markets. [BRIC ETFs Languis]
The MSCI Beyond BRIC Index was comprised of 505 securities domiciled in 17 different countries including South Korea, South Africa, Taiwan and Mexico at the end of October, according to State Street.
While South Korea and Taiwan are easily accessible in scores of other emerging markets ETFs, the pair is nevertheless attractive because they are viewed as less volatile relative to other developing economies. Importantly, South Korea sports a current account surplus in an environment where global investors prize that trait. [Hope for Downtrodden Indonesia ETFs]
EMBB caps country exposures at 15% each quarter and carries an annual fee of 0.55%. Boston-based State Street had $360 billion in global ETF assets at the end of the third quarter.
ETF Trends editorial team contributed to this post.