The ongoing debate regarding South Korea's status as a
developed or developing market grew a bit on Monday when Barclays
(NYSE:
BCS
) announced its bond indexes will view the country as an emerging
market. South Korea's status as an emerging market has long
debated, particularly as the nation's wealth has grown in recent
years.
Earlier this year, index provider MSCI (NYSE:
MSCI
) maintained South Korea as an emerging market for its indexes,
though
the country remains on MSCI's list for possible
promotion to developed market status
.
The debate gained more steam in early October when Vanguard,
the third largest U.S. ETF provider, announced it would drop the
MSCI Emerging Markets Index being used as the benchmark for the
Vanguard MSCI Emerging Markets ETF (NYSE:
VWO
). VWO will use the FTSE Emerging Markets Index,
which does not classify South Korea as a
developing nation
.
"Barclays EM benchmark bond indices (hard currency, local
currency, and inflation-linked) will use a single consistent list
of countries classified as EM when determining index eligibility.
Criteria for inclusion in this list include both World Bank
income group classifications and International Monetary Fund
country designations. In addition, the list will include
countries that bond investors generally classify as EM: South
Korea, Israel, Taiwan, and Czech Republic,"
according to a statement issued by Barclays
.
The changes will take effect in March 2013, Barclays said in
the statement.
Taiwan is also on the MSCI list of countries that could make
the jump to developed market status and Israel did just that
several years ago.
In addition to FTSE, Standard & Poor's, the International
Monetary Fund and the World Bank view South Korea as a developed
nation. However, Barclays and MSCI are not alone in still
classifying South Korea as emerging. Allocations to South Korea
are found in several popular WisdomTree (NASDAQ:
WETF
)
ETFs
, including the WisdomTree Emerging Markets Equity Income Fund
(NYSE:
DEM
).
In terms of emerging market bond ETFs that include exposure to
South Korea, that list includes the following well-known ETFs:
The WisdomTree Emerging Markets Local Debt Fund (NYSE:
ELD
), the WisdomTree Emerging Markets Corporate Bond Fund (NASDAQ:
EMCB
) and the iShares Emerging Markets Local Currency Bond Fund
(NYSE:
LEMB
).
For more on ETFs, click
here
.
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