Van Eck, the fund company behind the $23 billion family of
, filed regulatory paperwork detailing a shift on indexes for a
Africa-focused ETF and on a Mideast-focused ETF from Dow Jones
indexes to two so-called self-indexes created by the company's own
The planned changes, which should take effect by early summer,
cover the Market Vectors Africa ETF (NYSEArca:AFK) and the Market
Vectors Gulf States ETF (NYSEArca:MES), and are just the latest of
a series of similar index shifts the company has carried out since
establishing its own Frankfurt-based indexing unit last year.
The Africa ETF, "AFK," will shift to the Market Vectors
GDP Africa Index from its current benchmark, the Dow Jones Africa
Titans 50 Index; the Mideast ETF, "MES," will switch to the Market
Vectors GDP GCC Index from the Dow Jones GCC Titans 40 Index,
according to the paperwork and the company's website.
Market Vectors is a big part of the self-indexing trend in the
ETF industry, which sources say is motivated by a desire to save
money on indexing-licensing fees. Still, regulators are leery about
the trend to the extent that it may compromise the independence
that indexer providers have traditionally had from fund managers.
Firms like WisdomTree and IndexIQ have built entire ETF lineups
But even as the Securities and Exchange Commission has allowed
smaller ETF firms such as Northern Trust's FlexShares to begin
using so-called affiliated indexes, it has yet to allow iShares,
the world's biggest ETF firm, to do so. The company's parent,
BlackRock, filed a petition to self-index in the summer of 2011, a
delay industry sources say relates to iShares' huge size.
Differing Index Methodologies
The existing indexes are rules-based, modified
capitalization-weighted, float-adjusted benchmarks comprising
publicly traded companies that, in the case of AFK, are
headquartered in Africa or that generate the majority of their
revenues in Africa and, in the case of MES, give investors exposure
to the Gulf States.
For each of the two new Market Vectors indexes, the weighting of
each country is determined by the size of its gross domestic
product relative to the GDPs of the other countries represented in
the respective indexes.
AFK's new index currently has 106 holdings, more than twice as
many as the 52 the fund now holds with the Dow Jones index. MES'
new index meanwhile holds 55 companies, compared with 43
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