SSgA SPDR introduces “Beyond BRIC” ETF in Europe

Nov 7th, 2013 | By | Category: Equities

State Street Global Advisors (SSgA) has introduced the SPDR MSCI EM Beyond BRIC UCITS ETF (ZPRB), an exchange-traded fund providing exposure to emerging markets outside the BRIC region.

SSgA SPDR introduces “Beyond BRIC” ETF in Europe

The SPDR MSCI EM Beyond BRIC UCITS ETF emphasizes smaller emerging market countries such as South Africa.

The fund has been listed on the Deutsche Börse and will cross-list on the London Stock Exchange.

It is linked to the MSCI EM Beyond BRIC Index, a subset of the widely followed MSCI Emerging Markets Index.

The index is composed of 17 emerging market countries, excluding the so-called BRICs (Brazil, Russia, India and China) which currently represent over 40% of the parent MSCI Emerging Markets Index. The index is a standard market capitalisation-weighted index with a 15 percent cap on individual countries.

The BRIC countries have been the prime drivers of performance among emerging markets in the past, but have by now taken on many of the characteristics of developed economies thanks to significant growth over the last decade. These attributes include greater inclusion, correlations and dependence on the global developed economy.

Major constituents include Samsung Electronics (4.3% weight), Taiwan Semiconductor (3.1%), America Movil (2.6%), Naspers (1.9%) and MTN Group (1.8%). In terms of country exposures, South Korea currently has the largest weight with 16.2% followed by South Africa with 15.4%, Taiwan with 15.0%, Mexico with 12.9% and Malaysia with 9.6%. Firms in the financials sector comprise the largest weight (26.6%), followed by information technology (13.7%), materials (11.8%), consumer discretionary (11.1%), and consumer staples (9.1%).

Eleanor Hope-Bell, head of SPDR UK for SSgA, commented, “Smaller emerging market economies contain many of the characteristics and valuations that the BRIC economies had ten years ago. These countries have large populations with a growing middle class, high economic growth, increasingly sophisticated financial and more stable political systems.”

She added: “Many active emerging market strategies generate alpha by underweighting BRIC markets and overweighting smaller emerging markets. However, SSgA has created a new ETF focusing only on those smaller markets as a way of providing investors with a tactical investment tool to help manage their emerging market exposure.”

Deborah Yang, managing director and head of the MSCI Index Business in EMEAI, added: “We are delighted that SSgA has licensed the MSCI EM Beyond BRIC Index as the underlying index for their new ETF, and are very pleased to strengthen our working relationship with them in Europe. The MSCI EM Beyond BRIC Index was launched in response to client demand and we believe that it offers a new way of tracking and evaluating the emerging markets opportunity for those wishing to invest in countries outside the BRIC region.”

SSgA has achieved $3.4 billion in net ETF inflows year-to-date and has 53 SPDR ETFs available across Europe.

A US-listed version of the fund, the SPDR MSCI Beyond BRIC ETF (EMBB), looks set to launch imminently, according to filings with the US Securities & Exchange Commission.

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