The proposed funds are based on free-float-adjusted market-capitalization-weighted indexes that track the performance of small companies comprising the bottom 14 percent of their respective country's securities markets. The funds are small-cap versions of a slew of country-focused funds San Francisco-based iShares has on the market already, many of which have become quite popular.
Small-cap companies are generally thought of as higher-risk/higher-reward propositions than larger companies. Moreover, they often give investors more direct exposure to local economies than do larger companies, as big firms are typically more directly tied into the global economy. Touting such qualities, companies such as Rye Brook, N.Y.-based IndexIQ have focused intensively on rolling out equity funds focused on small-cap companies.
The iShares registration statements with the Securities and Exchange Commission indicated that all the proposed funds will invest at least 90 percent of their assets in their underlying indexes and will also have leeway to invest the remaining assets in futures, contracts and options related to the underlying indexes.
The proposed funds iShares filed for, linked to their respective registration statements, include:
- iShares MSCI South Korea Small Cap Index Fund
- iShares MSCI Taiwan Small Cap Index Fund
- iShares MSCI Hong Kong Small Cap Index Fund
- iShares MSCI Singapore Small Cap Index Fund
- iShares MSCI United Kingdom Small Cap Index Fund
- iShares MSCI Germany Small Cap Index Fund
- iShares MSCI Canada Small Cap Index Fund
- iShares MSCI Australia Small Cap Index Fund
iShares didn't include the annual expense ratio or the ticker symbols of any of the proposed funds in its filings.