MSCI Tradition Meets Global X Innovation with Eight New EAFE and Emerging Market ETFs

New funds cover equity, enhanced index and covered call strategies.

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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

Developed and emerging markets have been a distinct allocation within ETF investor portfolios for some time and good reason: if you want a truly diversified portfolio, it can’t just be local; you need to go global.  

With a history of innovation spanning five decades, MSCI has helped provide exposure to these markets through its leading international indexes.

Now, with new ETFs from Canada’s Global X, there’s a greater world of opportunity and choice for investing in these international markets. In partnership with MSCI as its index provider, Global X has launched eight ETFs that offer Canadians a way to achieve benchmark exposure, as well as covered call and lightly levered overlays on the MSCI EAFE Index and the MSCI Emerging Markets Index. Before we dive further into these ETFs, let’s take a closer look at the indices.

MSCI EAFE, Emerging Markets: Evolution and Growth  

Since its inception in 1986, the MSCI EAFE Index has maintained a trajectory of evolution and growth. It represents developed markets in Europe, Australasia, and the Far East (EAFE). The index has 900 securities across 21 developed market countries. Developed markets have expanded to offer exposure with sector weights in financials (20%), industrials (17%) and health care (13%). Two-thirds of its country weights centre on established markets—Japan, the U.K., France, Switzerland, and Germany. As of August 30, 2024, the MSCI EAFE has produced a 1-year net return of 18.94%.  

Meanwhile, the MSCI Emerging Markets Index was launched in 1988. At launch, the index included 10 emerging market countries and represented less than 1% of the global equity universe, the top country weights were Malaysia, Brazil and Thailand. Since then, emerging markets have drastically evolved and expanded; today, the index includes 24 emerging market countries and accounts for nearly 11% of the global equity opportunity set. The top countries are now China, India, and Taiwan. As of August 30, 2024, the MSCI Emerging Markets Index has produced a 1-year net return of 15.07%.  

Enhanced Equity, Covered Call ETFs Highlight New Funds

The rise of derivative-based ETFs has given investors unique ways to access index exposure with the potential for different income, performance and/or risk metrics. An example of an ETF provider that is leading the way on these cutting-edge investment opportunities is Toronto-based Global X Investments Canada Inc., (“Global X Canada”) one of the country’s first and largest ETF providers, with more than $35 billion AUM and 125-plus ETFs in its portfolio.  

Already possessing one of the most diverse ranges of strategies to achieve Canadian and U.S. exposure, Global X Canada has launched eight MSCI-focused funds with differentiated strategies for international exposure. The new funds cover four ways to invest: benchmark tracking, enhanced, covered call, and enhanced covered call.

Choosing MSCI EAFE, Emerging Markets Funds

Picking the appropriate fund boils down to a decision tree, first in terms of which category (and thus strategy) is right for you and then within that category, determining which markets you want exposure to while also taking risk tolerance into account. Here's how each of those four investment types, works:  

Overall, it's important to understand which ETF matches your investment goals, especially in terms of tailoring exposure to preferred markets and dialling in risk.  

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Bottom Line on New Global X MSCI ETFs

Taken together, the eight new Global X Canada funds offer Canadian investors a range of new ETF opportunities unlike any other.  MSCI, with a legacy dating back to 1968, combines its deep market expertise with Global X Canada's cutting-edge ETF solutions—offering smart advisors and their investors a unique blend of experience and innovation for greater market reach.

DISCLAIMERS

Commissions, management fees, and expenses all may be associated with an investment in products (the “Global X Funds”) managed by Global X Investments Canada Inc. The Global X Funds are not guaranteed, their values change frequently and past performance may not be repeated.  Certain Global X Funds may have exposure to leveraged investment techniques that magnify gains and losses which may result in greater volatility in value and could be subject to aggressive investment risk and price volatility risk. Such risks are described in the prospectus. The prospectus contains important detailed information about the Global X Funds. Please read the relevant prospectus before investing.

Certain ETFs are alternative investment funds (“Alternative ETFs”) within the meaning of the National Instrument 81-102 Investment Funds (“NI 81-102”) and are permitted to use strategies generally prohibited by conventional mutual funds, such as the ability to invest more than 10% of their net asset value in securities of a single issuer, the ability to borrow cash, to short sell beyond the limits prescribed for conventional mutual funds and to employ leverage of up to 300% of net asset value. While these strategies will only be used in accordance with the investment objectives and strategies of the Alternative ETFs, during certain market conditions they may accelerate the risk that an investment in ETF Shares of such Alternative ETF decreases in value. The Alternative ETFs will comply with all requirements of NI 81-102, as such requirements may be modified by exemptive relief obtained on behalf of the ETF.

The funds or securities referred to herein are not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The prospectus contains a more detailed description of the limited relationship MSCI has with Global X Investments Canada Inc. (“Global X”) and any related funds.

Certain statements may constitute a forward-looking statement, including those identified by the expression “expect” and similar expressions (including grammatical variations thereof). The forward-looking statements are not historical facts but reflect the speaker’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These and other factors should be considered carefully and listeners should not place undue reliance on such forward-looking statements. These forward-looking statements are made as of the date hereof and the speakers do not undertake to update any forward-looking statement that is contained herein, whether as a result of new information, future events or otherwise, unless required by applicable law.

This communication is intended for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase investment products (the "Global X Funds") managed by Global X Investments Canada Inc. and is not, and should not be construed as, investment, tax, legal or accounting advice, and should not be relied upon in that regard. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies. These investments may not be suitable to the circumstances of an investor.

All comments, opinions and views expressed are generally based on information available as of the date of publication and should not be considered as advice to purchase or to sell mentioned securities. Before making any investment decision, please consult your investment advisor or advisors.

Global X Investments Canada Inc. (“Global X”) is a wholly-owned subsidiary of Mirae Asset Global Investments Co., Ltd. (“Mirae Asset”), the Korea-based asset management entity of Mirae Asset Financial Group.  Global X is a corporation existing under the laws of Canada and is the manager, investment manager and trustee of the Global X Funds.

©2024 Global X Investments Canada Inc. All Rights Reserved.

Published October 8, 2024 

 

Global X Investments Canada Inc. is an innovative financial services company and offers one of the largest suites of exchange traded funds in Canada. The Global X Fund family includes a broadly diversified range of solutions for investors of all experience levels to meet their investment objectives in a variety of market conditions. Global X has more than $35 billion of assets under management and 125 ETFs listed on major Canadian stock exchanges.