Emerging Global Advisors, the New York-based ETF firm focused only on emerging markets, filed papers with U.S. regulators to market 11 ETFs linked to a roster of benchmarks that divide up the developing markets in a variety of ways, ranging from countries to regions to sectors and volatility-focused income plays.
The comprehensive filing introduces new focus areas for the company, with ETFs dedicated to Turkey and South Africa. But it also expands on strategies that have resonated with investors.
Emerging markets remain attractive to investors as growth plays with a veneer of value created by this yearâs global sell-off. U.S. investors look to the developing world for income amid a sluggish global economy that has impaired the prospects for developed markets for the last three years.
EGShares now ranks as the 25 th -largest ETF provider in the United States, with total assets under management of more than $500 million, according to data compiled by IndexUniverse.
Among the ETFs planned, two are dividend focused with an eye for keeping volatility in check, essentially country-specific versions of the EGShares Low Volatility Emerging Markets Dividend ETF (NYSEArca:HILO) the company rolled out this year.
HILO is designed to provide higher income and lower beta than the MSCI Emerging Markets Index. It came to market in August and has gathered nearly $20 million.
The Dividend ETFs joining HILO, and their price tags, include:
- EGShares Low Volatility China Dividend ETF, 0.85 percent
- EGShares Low Volatility Brazil Dividend ETF, 0.85 percent
The volatility-focused dividend ETFs each track a dividend-yield weighted Indxx benchmark comprising 30 securities deemed to have lower relative volatility than their respective 50-securities free-float capitalization-weighted Indxx benchmarks.
Companies need to have a market capitalization of at least $250 million and be domiciled in China and Brazil, respectively.
Expanding Country Reach
Some of the new ETFs planned are country-specific ETFs, two of which screen for small-cap companies thought to be more directly linked to domestic themes. A third adds to EGSharesâ growing roster of India-focused sector plays.
The funds and their respective fees are:
- EGShares Turkey Small Cap ETF, 0.85 percent
- EGShares South Africa Small Cap ETF, 0.85 percent
- EGShares India Consumer Goods ETF, 0.89 percent
Both the Turkey ETF and the South Africa ETF will track a respective free-float capitalization-weighted Indxx index, each consisting of 30 companies domiciled in that given country that have market capitalizations between $100 million and $2 billion.
The India ETF will invest in ADRs and GDRs as well as local shares of Indian consumer goods companies with a market capitalization of at least $100 million. It will replicate the Indxx India Consumer Goods Index, a free-float capitalization-weighted index comprising the sectorâs top 30 companies.
It would join EGSharesâ other India ETFs:the EGShares India Consumer ETF (NYSEArca:INCO) launched in August, and the India Infrastructure ETF (NYSEArca:INXX).
The filing also detailed three broader-in-scope emerging market sector ETFs, which would join the firmâs emerging market metals and mining ETF âEMTâ and a consumer-focused fund âECON.â They include:
- EGShares Emerging Markets Consumer Small Cap ETF, 0.85 percent
- EGShares Emerging Markets Balanced Income ETF, 0.75 percent
- EGShares Emerging Markets Real Estate ETF, 0.85 percent
The Consumer Small Cap ETF will include companies with a market capitalization between $100 million and $2 billion that operate across various segments of the consumer sector, including autos, beverages, food and drug retail, media, tobacco as well as various goods and services. Its benchmark consists of the leading 30 companies in the space.
Similarly, the EGShares Real Estate ETF will track a 30-holding index that invests in the various segments of the real estate industry. Companies must have at least $100 million in market capitalization to be included.
The EGShares Balanced Income ETF will track an Indxx index that is a dividend-yield-weighted benchmark that includes what the company calls a ârepresentative sampleâ of 40 emerging market companies as well as two underlying ETFs. The company said in the filing that, as a portfolio, the new ETF will have lower volatility characteristics than the MSCI Emerging Markets Index.
The ETFs included in the portfolio are selected based on their current yield and volatility rankings relative to other emerging market fixed-income ETFs, the filing said. Whatâs more, companies must have at least $250 million in market capitalization to make the cut.
âThe Emerging Markets Balanced Income underlying index was developed to provide a lower beta and a greater dividend yield than the MSCI Emerging Markets Index, although there is no guarantee that this result will be obtained,â the company said in the filing.
Going Beyond BRIC
EGShares is hoping to launch a roster of Asian sector ETFs that go beyond the traditional China-focused plays, and looks instead at the regionâs smaller players such as Indonesia, Malaysia, the Philippines and Thailand
The Beyond BRICs Asia ETFs include:
- EGShares Beyond BRICs Emerging Asia Small Cap ETF, 0.85 percent
- EGShares Beyond BRICs Emerging Asia Consumer ETF, 0.85 percent
- EGShares Beyond BRICs Emerging Asia Infrastructure ETF, 0.85 percent
Each of the Asian ETFs will replicate Indxx benchmarks and invest in securities as well as ADRs and GDRs of companies in Indonesia, Malaysia, the Philippines and Thailand with a market capitalization of at least $100 million. Each benchmark is a portfolio of 30 securities.
The small-cap portfolio excludes companies that have a market capitalization exceeding $2 billion.
ALPS Advisors is the advisor for the funds. Tickers werenât disclosed.
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