iShares Plans Several Emerging Market ETFs

iShares, the BlackRock unit and the world’s biggest ETF company, filed four separate registration statements with U.S. regulators to market a number of emerging markets ETFs that slice the segment into growth and value strategies, as well as three Asia-focused funds and a sector fund focused on consumer spending.

The six new ETFs amount to iShares’ efforts to further slice and dice the emerging markets segment as investors continue to look outside of the developed economies for prospective investment opportunities especially now, as concerns over Europe’s debt load and slacking U.S. growth mount.

One of the Asian funds is a broad-based ETF, and the other two target India—one broad-based the other focused on small-cap Indian firms, according to separate regulatory filings detailing the funds. Asia is perhaps the most vibrant region in the world economy and, more so than China, many see India with better long-term prospects than China based on younger demographics and richer geography.

The emerging markets consumer ETF marks iShares' attempt to give investors access to growing consumer demand in the emerging markets. Companies such as Emerging Global Advisors have had success with this strategy. The EGShares DJ Emerging Markets Consumer Titans ETF (NYSEArca:ECON) has almost $250 million in assets, and is the New York firm’s single-most successful fund.

Slicing Emerging Markets Into Growth and Value

Both the iShares MSCI Emerging Markets Growth Index Fund and the iShares MSCI Emerging Markets Value Index Fund will track MSCI indexes that pick securities from the broader MSCI Emerging Markets Index, the same index anchoring the iShares MSCI Emerging Markets Index Fund (NYSEArca:EEM), according to respective filings.

EEM, which until January of this year was the world’s largest emerging ETF, has about $32 billion in assets. It’s now second only to Vanguard’s MSCI Emerging Markets ETF (NYSEArca:VWO), which boasts $45 billion in assets.

iShares’ new funds would go head-to-head with a pair of Global X ETFs that, while linked to Russell benchmarks, offer the same focus on growth and value stocks.

But neither the Global X Russell Emerging Markets Growth ETF (NYSEArca:EMGX) nor the Global X Russell Emerging Markets Value ETF (NYSEArca:EMVX) has attracted sizable assets. They have each gathered about $2.2 million in assets since their January inception.

MSCI evaluates each security with growth and value factors, looking at forecasted earnings growth rates, book value to price ratios, forward earnings to price ratios and dividend yields in order to determine whether the stock is a growth opportunity or a value name.

Some companies might be included in both portfolios, the company said in the filings.

Both funds span their exposure across some 20 countries, but the growth portfolio hones in on financial, information technology and material companies, while the value mix includes energy, financial and telecommunication service names.



Emerging Asia Fund

In a separate filing, iShares detailed plans to launch the iShares MSCI Emerging Markets Asia Index Fund, which in some ways combines many of the firm’s extensive lineup of MSCI-linked country-specific ETFs.

Among those are the iShares MSCI Taiwan ETF (NYSEArca:EWT), the iShares MSCI Indonesia Investable Market ETF (NYSEArca:EIDO) as well as funds focused on the Philippines, Malaysia and Thailand.

The new emerging Asian ETF will replicate the free-float-adjusted market capitalization-weighted MSCI Emerging Markets Asia Index that tracks companies in Hong Kong, India, Indonesia, Malaysia, Philippines, South Korea, Taiwan and Thailand.

Financial, information technology and material companies are included in the mix. The fund might rely on derivatives instruments to execute its strategy, the filing said.

In two other filings, the San Francisco-based ETF company detailed the iShares MSCI India Index Fund and the iShares MSCI India Small Cap Index Fund,

Eyeing Developing Market Consumers

The iShares MSCI Consumer Discretionary Index Fund will zoom in on the consumer discretionary segment in 14 countries, including some of the largest consumer bases in the emerging economies, such as Brazil, Hong Kong, South Korea, Mexico, Poland and Turkey.

The exposure will be focused on car and auto part manufacturers, consumer durables and apparel companies, consumer service names as well as media producers and retailers, the filing said.

iShares already offers other emerging market sector funds, such as the $19 million iShares MSCI Emerging Markets Financial Sector Index Fund (NYSEArca:EMFN) and the $9 million iShares MSCI Emerging Markets Materials Sector Index Fund (NYSEArca:EMMT). Â They were launched about a year and a half ago.

No tickers or fees were disclosed for any of the funds in the filings.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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