At the sector level, financial services and energy, two of the mainstay sectors of many emerging markets ETFs, combine for just 27% of EWEM’s weight compared to almost 37% of EEM. The Guggenheim offering is also underweight technology compared to EEM, but the former is overweight consumer discretionary, industrial and materials names compared to its rival,
An advantage offered by EWEM, depending upon the market environment, is reduced exposure to state-controlled enterprises. As seasoned emerging markets investors know, there are times when state-run companies disappoint investors. Six such firms combining for over 6% of EEM’s weight are found among that ETF’s top-10 holdings.
In EWEM, Russia’s Gazprom, as just one example, does not even account for a third of the ETF’s weight and even in aggregate, Chinese banks are not important drivers of EWEM’s overall performance.
Guggenheim MSCI Emerging Markets Equal Weight ETF
Tom Lydon’s clients own shares of EEM and RSP.