State Street Global Advisors, the fund sponsor behind the SPDR
ETFs, today rolled out two equities ETFs, one that serves up a
subset of the two largest funds in the emerging markets space,
while the other is a blend of developed and emerging stocks.
The SPDR MSCI EM 50 ETF (NYSEArca:EMFT) will track an MSCI index
that picks the 50 largest names, by market capitalization, in the
MSCI Emerging Markets Index, the same benchmark underlying the
iShares MSCI Emerging Markets Index Fund (NYSEArca:EEM) and the
Vanguard MSCI Emerging Markets ETF (NYSEArca:VWO). EMFT has an
annual expense ratio of 0.50 percent.
The emerging-blended portfolio, the SPDR MSCI ACWI IMI ETF
(NYSEArca:ACIM), will own securities from both developed and
emerging economies in a mix that picks the largest names from a
broad pool of global equities that canvass almost the entire
investable universe. ACIM has an annual expense ratio of 0.25
On the surface, the new funds can be construed as me-too
strategies from a company that already has a handful of emerging
market- and internationally focused ETFs. For example, its
broad-based SPDR S&P Emerging Markets ETF (NYSEArca:GMM) has
attracted $181 million, and its $453 million SPDR MSCI ACWI ex-U.S.
ETF (NYSEArca:CWI) focuses on developing-world stocks outside of
the United States.
Still, by the looks of it, the two new ETFs are less expensive
than State Street's existing funds and also focus on the importance
of liquidity, which can keep bid/ask spreads tight and minimize
Zooming In On Liquidity
Both EMFT and ACIM apply liquidity screens that look at what the
company calls annualized traded value ratios-trading volume
relative to the company's float-adjusted market capitalization-to
ensure that the fund is investing only in the largest and most
EMFT will own 50 securities from as many as 21 countries. The
fund includes exposure to Korea, a country excluded from SSgA's
GMM, which also happens to carry a heavier focus on BRIC
countries-Brazil, Russia, India and China.
GMM's $181 million in assets is a far cry from its competitors
EEM and VWO, which boast $37 billion and $49 billion in assets,
respectively. What's more, GMM is not even the costliest of the
three, at 0.59 percent. That distinction goes to iShares' EEM's
0.67 percent price tag. VWO costs 0.22 percent.
Another interesting nugget is that EMFT will obtain exposure to
four of its 21 countries-Brazil, India, Mexico and Russia-via
depositary receipts rather than local stocks, the company said in
the prospectus it filed with U.S. regulators prior to launch.
The distinction could mean better liquidity in the exposure to
those four markets because local emerging stocks can be more
difficult to access and less liquid. But it could also lead to
bigger tracking errors.
ACIM, meanwhile, tracks an index that consists of nearly 9,000
securities across 45 countries, roughly half of which are emerging
economies. It's rebalanced quarterly.
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