An interesting trend is developing with some of the most
noteworthy emerging markets
this quarter. As
, the Vanguard MSCI Emerging Markets ETF (NYSE:
) has lost $200 million in assets.
There is no need to cry for VWO. It is still the largest
emerging markets ETF with $56 billion in assets. What makes the
departure, albeit small, of assets from VWO is that the rival
iShares MSCI Emerging Markets Index Fund (NYSE:
) has picked up $2.2 billion in investor cash this quarter,
Barron's reported, citing XTF.com data.
EEM long ago lost the title of largest emerging markets ETF to
VWO based primarily on the expense ratios of the two funds. VWO
charges just 0.2 percent per year while EEM charges 0.67 percent.
So on a percentage for the quarter, EEM has added an impressive
six percent to its assets under management total and the fund is
now resting near $39 billion.
More impressive on a percentage basis has been another
emerging markets ETF that is quickly becoming
known for its asset-gathering acumen
. That fund is the iShares MSCI Emerging Markets Minimum
Volatility Index Fund (NYSE:
No, the iShares MSCI Emerging Markets Minimum Volatility Index
Fund cannot compete with EEM in dollar terms, but the former has
added 10.2 percent to its AUM total since October 16. While EEMV
is too large to accurately be deemed "anonymous" or "overlooked,"
it does not garner mainstream attention on par with that of EEM
Arguably, that is problematic on some level EEMV has some
secret weapons in its favor that may make the better bet than EEM
or VWO. Namely, EEMV
has sharply outperformed its larger rivals
with an expense ratio of just 0.25 percent.
Said another way, by paying five extra basis points for EEMV
over VWO, investors have been treated to nearly 600 basis points
in additional alpha this year. EEMV also delivers on its low
volatility promise. The ETF's year-to-date volatility is 15.5
percent compared to 19.9 percent for VWO and 20.4 percent for
Should the fiscal cliff be averted and emerging markets
equities pop through year-end, it would not be surprising to see
EEMV add to its AUM and perhaps begin a flirtation with the $1
billion threshold next year.
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