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iShares Rolls Out Emerging Mkts Small-Cap ETF

iShares, the world’s-largest exchange-traded fund company, launched a broad emerging markets equities ETF focused on small-cap companies, entering the crowding space of small-cap strategies.

The iShares Emerging Markets Small Cap Index Fund (NYSEArca:EEMS), costing 0.69 percent, will go head-to-head with the SPDR S&P Emerging Markets Small Cap ETF (NYSEArca:EWX), which costs 0.65 percent.

While EEMS will track an MSCI benchmark that tracks companies with market capitalization under $3 billion in 21 emerging markets, EWX is linked to an S&P index comprising the under-$2-billion-in-market-cap names.

Small-cap strategies have resonated with investors, who have looked to smaller companies for more direct access to local economies, as they are often thought to be more in touch with the growing middle class in countries such as China, India and Brazil.

EWX, for instance, has gathered more than $1.1 billion since its May 2008 inception. And a slew of other funds, including a family of small-cap single-country funds from IndexIQ, such as one focused on South Korea (NYSEArca:SKOR), have also been popular with investors.

EEMS allocates nearly 20 percent of its basket to Taiwan names, with South Korea and Hong Kong also at the top. By contrast, EWX allocates 32 percent of its portfolio to Taiwan, with China, South Africa and India rounding off its top country holdings.

As of July 31, consumer discretionary names represented 17 percent of the MSCI Emerging Markets Small Cap Index—EEMS’ benchmark—with industrial and financials each snagging 16 percent of the pie, while information technology and materials each represented 15 percent.

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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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