Emerging Global Advisors, under its EGShares brand name, is the
only ETF provider that focuses exclusively on emerging market
products. The firm has launched several specialized products
targeting specific sectors across various nations to become one of
the biggest players in the developing nation ETF space.
This includes the
EGShares Beyond BRICs ETF (
, which offers up targeted exposure to comapnies in developing
nations besides those in Brazil, Russia, India, and China.
However, the product has failed to garner a substantial level
of investors' interest since its debut more than a year ago. The
fund has amassed only $11.5 million in AUM while sees light volume
of under 8,000 shares per day on average. The ETF is down nearly 2%
in the year-to-date period (read:
3 Biggest ETF Winners from the 3rd Quarter
This is because emerging markets were depressed in the first eight
months of the year on growth slowdowns and capital flight. Given
this, and a desire to focus on smaller markets in the developing
world, BBRC has undergone an index change though the ticker symbol
remains unchanged. Earlier this month, the ETF also cut its expense
ratio from 0.85% to 0.58%.
Index Change and New Holdings
The ETF now seeks to track the FTSE Beyond BRICs Index instead of
Indxx Beyond BRICs Index, suggesting a big shift in the exposure
profile. The new index expands BBRC exposure to frontier markets
like Qatar, Nigeria and United Arab Emirates for the first time and
increases fund holdings from 50 to 90 (read:
Why Frontier Markets ETFs are Still Attractive
This change is especially important given that the FTSE Beyond
BRICs Index provides 75% exposure to emerging markets excluding
Brazil, Russia, India, China, South Korea and Taiwan, and 25% to
Holding 90 securities in its basket, the fund no doubt offers more
diversification across individuals and nations than before. Each
security holds less than 4% of BBRC.
Mexican and South African firms get the largest allocation with 16%
each, closely followed by Malaysia (12.3%) and Qatar (10.3%). Other
countries make up a nice mix of the portfolio (see:
all the Broad Emerging Market ETFs here
In terms of a sector look, the product is skewed toward financials
with one-third share while telecommunication services and consumer
staples round out the next two spots with double-digit exposure.
Previously, the fund had a large concentration in South Africa with
nearly 22% share and the top firm - Naspers - had over 6%. The
product was also heavy on financials and telecom with almost the
same allocation as that of FTSE index. However, the ETF still
maintained its focus on large cap exposure with the new index.
Clearly, there are some differences between the old and new
benchmarks, suggesting modest change for many investors. The larger
number of securities and greater country exposure seem to be the
real key. Nevertheless, the old and new indexes are quite
comparable in terms of sector and individual companies.
The ETF remains an interesting option for investors seeking wide
exposure in the global ex-developed market. The product would allow
investors to tap the still beaten down emerging economies that are
showing clear signs of a quick recovery (read:
Emerging Market ETFs: How to Pick Winners?
Further, valuations of these nations are quite favorable at the
current levels and growth rates are still high when compared to
many of the developed nations, so this could be an interesting pick
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EGS-BEYOND BRIC (BBRC): ETF Research Reports
ISHARS-MSCI BRC (BKF): ETF Research Reports
GUGG-BRIC (EEB): ETF Research Reports
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