EGShares launches Emerging Markets Core ETF based on new S&P index

Oct 17th, 2012 | By | Category: Equities

Emerging Global Advisors (EGShares) has announced the launch of the EGShares Emerging Markets Core ETF (EMCR), an exchange-traded fund (ETF) that aims to provide a diversified core approach for investors seeking broad exposure to emerging market equities.

EGShares launches Emerging Markets Core ETF based on new S&P index

The EGShares Emerging Markets Core ETF (EMCR) offers a diversified core approach to emerging market investing.

The fund is the first to track the S&P Emerging Markets Core Index, a newly launched index from S&P Dow Jones that is diversified by country, sector and industry.

Initially conceived by the EGShares team, the new S&P index seeks to avoid the industry and mature-economy concentrations of conventional benchmarks which result from their market-cap weighting approach.

The index aims to avoid these concentrations by focusing on industry groups rather than sectors as index building blocks, equally weighting constituents, capping country exposures, and by containing no developed market companies.

The index currently has 80 constituents, each with a weight of 1.25%. Constituents include companies such as Gazprom, Lukoil, Petrobras, Embraer, Orascom Construction, Wal-Mart de Mexico, Genting and Unilever Indonesia.

The top five country weights are China, South Africa, and India, each with 15%, and Brazil and Russia with 10% and 8.8% respectively; Chile, Malaysia and Mexico also have significant representation with 7.5% each.

At the sector level, the top five weights are consumer staples (17.5%), consumer discretionary (17.4%), financials (16.3%), industrials (10.3%), and utilities (7.2%). Of note is the 16.3% weight allocated to financials. By contrast, the flagship FTSE and MSCI emerging markets indices both give the sector over 24%.

Commenting on the launch, Marten Hoekstra, CEO of Emerging Global Advisors, said: “In the last decade, conventional benchmarks have been increasingly used as substitutes for portfolios. A consequence of this in portfolios is industry concentrations that are a legacy of the historical maturation of emerging markets.”

Hoekstra added: “We believe investors continue to respect the value of these indices as benchmarks, but in their own portfolios prefer to have a more diversified approach. We think EMCR and the S&P Emerging Markets Core Index meet that need.”

Michael Orzano, Associate Director at S&P Dow Jones Indices, said: “The launch of the S&P Emerging Markets Core index signals a new approach to emerging market core holding index design. Its rigorous methodology reduces the sector, industry, and country concentrations common to market-capitalisation-weighted emerging market indices.”

The fund trades on the NYSE Arca under the ticker symbol EMCR and comes with a net expense ratio of 0.70%.

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