), the provider of some of the most widely used international
indices for ETFs, has unveiled its own take on the "Beyond BRICs"
theme with the launch of the MSCI Beyond BRIC Index.
As the name implies, the MSCI Beyond BRIC Index excludes
Brazil, Russia India and China, countries that currently combine
for about 40 percent of the MSCI Emerging Markets Index. The MSCI
Emerging Markets Index is the underlying index for the iShares
MSCI Emerging Markets ETF (NYSE:
), which currently allocates more than 41 percent of its weight
to the BRIC nations.
The MSCI Beyond BRIC Index "is designed to provide a broad
measure of the performance of emerging market equities outside of
the BRIC markets - Brazil, Russia, India and China. In addition,
to provide greater country diversification, the weight of each
single country is capped on a quarterly basis at 15%,"
according to MSCI
"The BRIC countries have been recognized over the past few
years as key drivers of economic growth within the Emerging
Markets and many institutional investors already have exposure to
those countries within their portfolios," said Deborah Yang,
Managing Director and Head of the MSCI Index Business in Europe,
the Middle East, Africa and India, in a statement. "We have
launched the MSCI EM Beyond BRIC Index in response to client
demand and believe it offers a new way to track and evaluate the
Emerging Markets opportunity set for those wishing to invest in
countries outside the BRIC region."
Frontier Market Index Secrets Revealed
South Africa, Taiwan and South Korea are the heavyweights in
the MSCI Beyond BRIC Index, combining for about 46 percent of the
index's weight. Countries such as Mexico, Malaysia and Indonesia
are more heavily represented than they are in the emerging
markets index. That trio combines for about 28 percent of the
MSCI Beyond BRICs Index, but Mexico and Malaysia are barely nine
percent of EEM's weight.
"The MSCI EM Beyond BRIC Index has outperformed the MSCI
Emerging Markets Index since 1999 (12.0% gross annualized return
in USD vs 11.1%). Between 1999 and 2007, the MSCI Emerging
Markets Index outperformed the MSCI EM Beyond BRIC Index by 2.1
percentage points (20.1% vs 18%). Since 2007, the MSCI EM Beyond
BRIC Index has had a positive annualized performance of 2.83%
while the MSCI Emerging Markets Index had a negative performance
of 2.1%," according to MSCI.
Top-10 holdings in the MSCI Beyond BRIC index include Samsung,
Taiwan Semiconductor (NYSE:
) and America Movil (NYSE:
). Financial services is the largest sector weight at almost 26.1
percent while technology and materials combine for nearly 26
As of August 30, the Beyond BRIC index traded with a slightly
lower dividend yield and higher valuations than what was seen on
the emerging markets index. However, the MSCI Beyond BRIC Index
has a three-year standard deviation that is nearly 200 basis
points lower than the emerging markets index,
according to MSCI data
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