Daily ETF Watch: Blue Chip EM ETF Launches

Emerging Global Advisors’ latest ETF is looking to tap into a resurging emerging market.

HungTran_100x66.jpg
|
Reviewed by: Hung Tran
,
Edited by: Hung Tran

Emerging Global Advisors’ latest ETF is looking to tap into a resurging emerging market.

Emerging Global Advisors is launching the EGShares Blue Chip ETF (BCHP) today to invest in developed-world blue chip companies that have sizable operations in the emerging markets at a time when asset prices in some pockets of the emerging markets still are under pressure as the Federal Reserve continues “tapering” its quantitative easing.

The ETF will track the companies in the EGAI Developed Markets Blue Chip EM Access Index, an equal-weighted stock market index comprising 30 developed market companies that have growing revenue exposure to emerging and frontier markets.

Broader emerging market ETFs such as the iShares MSCI Emerging Markets ETF (EEM | B-100) fell 3.6 percent last year, and the Vanguard FTSE Emerging Markets ETF (VWO | C-90) was down about 5.0 percent in 2013.

Year-to-date, EEM is down 0.3 percent and VWO is up 0.4 percent.

BCHP’s expense ratio is 0.60 percent, or $60 for every $10,000 invested, according to an updated regulatory filing.

 

Filing

iShares has updated regulatory paperwork on its fund of funds, the iShares Yield Optimized Bond ETF (BYLD), and plans to launch it on the NYSE Arca on Thursday, April 24. The launch comes at a time when investors are looking for yields in all corners of the fixed-income market and even outside of it.

Rates are low as it is, and the Federal Reserve’s most recent policy meeting has left investors with a sense that rates are likely to be trending higher in the coming months, making capital losses quite probable as bond prices fall.

The Federal Reserve’s continuous focus on tapering its bond-buying program and Fed Chair Janet Yellen’s suggestion that the Fed could raise short-term rates earlier rather than later in 2015 has investors on edge.

BYLD’s index, the Morningstar U.S. Bond Market Yield-Optimized Index, will have exposure to government-related fixed-income securities, securitized fixed-income securities, investment-grade credit securities and noninvestment-grade credit securities, according to the filing.

Some iShares ETF represented in the index include the iShares 1-3 Year Treasury Bond ETF (SHY | A-97), the iShares 10+ Year Credit Bond ETF (CLY | C-78) and the iShares iBoxx $ High Yield Corporate Bond ETF (HYG | B-75).

The fund comes with a price tag of 0.28 percent, or $28 for every $10,000 invested.

In addition, iShares has put into registration the iShares U.S. Fixed Income Balanced Risk ETF, which will invest in fixed-rate securities of varying maturities, such as corporate bonds, including U.S. dollar-denominated securities of foreign issuers, U.S. Treasurys, privately issued securities, and mortgage-backed securities.

Associated fees and tickers were not yet made available for the ETF in the filing.

 

Hung Tran is a former staff writer for etf.com.