iShares Plans Multicountry Asian Tech ETF

November 03, 2011

iShares lays the groundwork for a first-to-market pan-Asia technology ETF.

iShares, the world’s largest ETF sponsor, filed paperwork with the Securities and Exchange Commission to bring to market the first ETF to cast a wide net over Asia’s information technology sector.

The new fund, the iShares MSCI All Country Asia Information Technology Index Fund, is based on an underlying index that tracks the combined equity performance of software and semiconductor companies in five developed and emerging markets countries: Hong Kong, India, Japan, South Korea and Taiwan.

The information technology sector has grown rapidly in Asia in recent years with the stratospheric growth of multinational companies such as India-based Infosys Technologies Limited; China Mobile, the world’s largest mobile phone operator; and South Korea’s electronic device behemoth Samsung.

However, investors are only able to directly access Asia’s tech firms in a limited way. According to IndexUniverse’s ETF Classification System Web page, the only two funds that focus on technology in general in Asia are the country-specific Global X China Technology ETF (NYSEArca: CHIB) and the Guggenheim China Technology Fund (NYSEArca: CQQQ). iShares also offers indirect exposure to Asia’s tech sector through separate individual country funds. It has five on the market that each focus on stocks in the five countries the new fund will include.

Some of those individual country funds have significant holdings of information technology stocks. For example, more than half of the iShares MSCI Taiwan Index Fund (NYSEArca: EWT) is invested in that country’s tech sector, but EWT and the other iShares funds hold stocks in a broad array of industries as well.

The iShares MSCI All Country Asia Information Technology Fund that’s now in registration will invest at least 80 percent of its assets in the securities of its underlying index, and will own depository receipts to achieve its investment strategy.

The fund will employ a representative sampling indexing strategy, meaning it won’t own all the securities in the index.


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