This week, iShares announced a group of new "core" ETFs,
including the iShares Core MSCI Emerging Markets ETF
(NYSEArca:IEMG), which are expected to begin trading on or about
Oct. 22, 2012, according to the iShares press release.
IEMG is expected to charge 0.18 percent per year, nearly 0.50
percent less than iShares' already-live iShares MSCI Emerging
Markets Index Fund (NYSEArca:EEM), and 0.02 percent less than the
Vanguard MSCI Emerging Markets ETF (NYSEArca:VWO).
But the price difference isn't the only improvement.
IEMG will track the IMI version of the MSCI Emerging Markets
Index, which means it will cover 99 percent-rather than 85
percent-of the investable emerging markets market capitalization.
That means you'll have access to the smaller companies that stand
to benefit most as emerging economies develop.
For those of you who prefer numbers to words, IEMG will track an
index that holds over 2,600 companies, rather than one that holds
I've summarized EEM's and IEMG's size and style characteristics
The above analysis assumes that IEMG will fully replicate its
underlying index, which may or may not be the case given the
difficulty of investing in emerging markets micro caps.
Although I'd personally prefer more comprehensive coverage for
less money, others may not want to take on the additional risk that
accompanies small- and micro-cap companies. The 0.49 percent price
drop may not be enough to entice such people away from EEM.
New funds generally take some time to pick up volume, and
there's no guarantee that investors will move from EEM-or from
VWO-into IEMG. Thus, early trading costs for frequent traders could
very possibly eclipse expense ratio savings, especially if those
brokers who are now offering commission-free trades on EEM,
like Fidelity, don't extend those offers to IEMG.
Overall, however, I'm very excited about the launch of IEMG, and
look forward to seeing how it does.
At the time the article was written, the author had a
position in VWO. Contact Carolyn Hill at
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