iShares expands London range with local EM Asia debt and Mexico equity ETFs

Mar 9th, 2012 | By | Category: Fixed Income

iShares has launched two new funds on the London Stock Exchange (LSE), expanding its range of emerging market products across fixed income and equities. The two new funds, the iShares Barclays Capital EM Asia Local Govt Capped Bond ETF (SGEA) and the iShares MSCI Mexico IMI Capped ETF (SMEX), are designed to meet the needs of investors searching for new sources of income and single-country emerging market exposure, respectively.

iShares has expanded its London-listed range with the launch of an EM Asia local debt bond ETF and a single-country equity ETF tracking Mexico.

iShares has expanded its London-listed range with the launch of an EM Asia local debt bond ETF and a single-country equity ETF tracking Mexico.

The iShares Barclays Capital EM Asia Local Govt Capped Bond fund is the first ETF in Europe to offer exposure to fixed-rate government bonds that are issued by emerging market countries in Asia and denominated in their local currencies.

It offers cost efficient and diversified access to a basket of bonds from countries including Thailand, South Korea, Philippines, Malaysia and Indonesia in a single trade.

Currently, South Korea is the fund’s largest country constituent with a 40% weight, Malaysia is second with 19.4%, while Thailand is third with 17.3%. The fund is physically-replicated, with full transparency into the underlying bonds and has a total expense ratio (TER) of 0.50%.

To aid liquidity and diversification, the benchmark index includes a cap so that no single country accounts for more than 40% of the index, and, in order to achieve best execution for investors, iShares has leveraged the expertise of BlackRock’s fixed income team in Singapore, who will handle the portfolio management and trading of the fund.

The iShares MSCI Mexico IMI Capped ETF, also physically-replicated, provides exposure to the largest and most liquid stocks in the Mexican equity market. A cap is applied to ensure no single group entity accounts for more than 30% of the index. Currently, the largest constituents are America Movil with a weight of 26.3%, Walmart De Mexico with 11.1% and Fomento Económico Mexicano with 8.1%. The fund has a TER of 0.65%.

Axel Lomholt, Head of iShares Product Development EMEA, says: “European investors are continuing to search for new sources of yield, and new ways in which they can secure sustainable income streams. Asian debt markets have grown steadily over the last ten years, and bonds denominated in local currencies provide a different yield and risk profile to US dollar denominated debt, allowing investors to diversify their fixed income holdings.

“We have also built out our emerging markets range to offer new opportunities to access growing markets at a country and regional level efficiently. Our US domiciled Mexico ETF has gathered approximately $1 billion [in AUM] to date, and we believe UK investors will find the new LSE-listed fund a valuable asset allocation tool.”

Tags: , , ,

Leave a Comment



More in Fixed Income
Franklin Templeton debuts two actively managed municipal bond ETFs
Franklin Templeton debuts two actively managed municipal bond ETFs

Franklin Templeton Investments has launched two new actively managed municipal bond ETFs, the Franklin Liberty Intermediate Municipal Opportunities ETF (NYSE Arca: FLMI) and...

Vanguard planning US total corporate bond ETF of ETFs
Vanguard planning US total corporate bond ETF of ETFs

Vanguard has filed a preliminary registration statement with the Securities and Exchange Commission for the Vanguard Total Corporate Bond ETF which is due...

Close