iShares Plans Regional EM Equity ETFs

October 26, 2011

iShares, the world’s largest exchange-traded fund sponsor, has filed regulatory paperwork to market two regional emerging market equities ETFs. One will focus on Latin America, and the other will target developing countries in Europe, the Middle East and Africa.

The two funds are:


Emerging markets have been all the rage over the past 10 years, but have been hit relatively hard in the market downturn since S&P downgraded U.S. debt on Aug. 5. Still, ETF companies have continued to fine-tune their developing market offerings. One popular category is emerging market debt funds. The WisdomTree Asia Local Debt Fund (NYSEArca: ALD), for example, has pulled in more than $417 million since its launch in March.

Economists generally have a favorable opinion about the long-term potential of emerging market countries. In comparison with the developed world, many emerging market countries are unencumbered by debt, and with the exception of China, these countries have young populations, a key growth indicator.

Both of the iShares regional developing market equity funds will focus on companies in the energy, financial and materials industries, the filings said.

According to the prospectuses, each of the emerging market ETFs typically will invest at least 80 percent of their assets in the securities of their respective indexes. The remainder of the assets may be invested in futures, options or cash equivalents, according to the filings.

iShares estimated that the funds won’t have tracking errors of more than 5 percent. The funds will use a representative sampling strategy, which means they won’t seek to own all the securities in their respective indexes.



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