EGShares Debuts New Core Emerging Markets ETF - ETF News And Commentary
October 16 2012 - 9:17AM
Zacks
Emerging Global Advisors, under its EGShares brand name, is the
only ETF provider to be entirely focused on emerging market
products. Over the past few years, the company has utilized this
strategy to become one of the biggest players in the developing
nation ETF space, with several popular funds like the Low
Volatility Emerging Markets Dividend ETF (HILO) and the
Emerging Markets Consumer Titans ETF (ECON).
The firm has also released a number of more specialized products
targeting specific sectors in various nations to differing degrees
of success. However, as of late it appears as though the company is
once again targeting the broad emerging market space with a few of
its funds (also see EGShares Reveals Plans for 11 Emerging Market
ETFs).
Recently, investors saw the Beyond BRICs ETF
(BBRC) hit the market, while the latest launch saw the
company debut the Emerging Markets Core ETF
(EMCR). This new fund brings the total number of emerging
market ETFs up to 22 for the upstart firm, easily cementing the
company as one of the leaders in the increasingly important market
segment (read EGShares Launches Two Targeted Emerging Market
ETFs).
This is especially true because many investors are still heavily
concentrated in just a handful of emerging market ETFs, forgoing
exposure to more specialized segments that could be the true
beneficiaries of immense growth in the near term. Furthermore, many
of these more popular products are heavily concentrated in a few
choice nations or sectors, suggesting a wide net isn’t being cast
by most investors in the space.
Enter EMCR
The new EMCR looks to alleviate some of these concerns and give
investors broad emerging market exposure across a variety of
sectors. This looks to be done by tracking the S&P Emerging
Markets Core Index, a benchmark that holds just over 100 securities
and is equally-weighted.
It should also be noted that the product will charge a
relatively low 70 basis points a year in fees while the dividend
looks to come in around the 2.2% mark on an annual basis.
Additionally, the fund has a nice breakdown across nations with
China, South Africa, and India hitting the 15% cap and then Brazil
and Russia accounting for, respectively, 10% and 8.8% of the fund
(read Three Emerging Market ETFs to Limit BRIC Exposure).
Beyond nations, the product is also a bit more tilted towards
consumer stocks instead of the heavy financial and oil
concentration that many other emerging market ETFs have. This
product puts close to 34% in the broad consumer space, a modest 16%
in financials, and then 10% in industrials to round out the top
four.
This approach clearly reduces the industry concentration that
afflicts many emerging market funds that are currently on the
market, while still giving the product a focus on large cap stocks.
This is further helped by the index’s stipulation which looks to
limit the largest industry groups to six companies in order to
ensure that a few firms do not dominate the broader index.
With this unique approach, EMCR could stave off the intense
competition in the broader emerging market space. Additionally, the
fund lacks a great deal of competition, due in large part to its
specialized focus (read Three Overlooked Emerging Market ETFs).
After all, there are only a handful of other equal weight
products out there in the emerging market space including
FEM and EWEM. However, these are
slightly more expensive than the EGShares new product and they both
have very different methodologies, suggesting that there could be
room for another competition in the quickly growing but
increasingly competitive emerging market ETF world.
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(EMCR): ETF Research Reports
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FT-EMG MKT AD (FEM): ETF Research Reports
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