Emerging Market Titans ETF Starts Trading: EEG

July 22, 2009 by  
Filed under Commentary, ETF IPOs (New ETFs), ETFs

Emerging Global Advisors continued the rollout of their Emerging Markets Sector Titans ETFs today (press release).  The launch of the Emerging Global Shares Dow Jones Emerging Markets Titans Composite Index Fund (EEG) is the third in the planned series of a dozen ETFs focused on the economic sectors of emerging markets.  Holding 100 stocks in all, EEG will buy the 10 top-ranked stocks from each of the 10 Dow Jones Emerging Markets Sector Titan Indexes.

The resulting fund will have exposure to fifteen emerging market countries with the largest concentrations in China (20.4%), Brazil (20.3%), India (18.2%), Russia (14.2%), Mexico (10.1%), and South Africa (8.3%).  Taiwan and South Korea are not represented because the ICB classification system used by Dow Jones in the formulation of the underlying index designates them as developed markets.

EEG’s top sector weightings will be initially skewed toward Energy with 29.0%, Financials 22.4%, Basic Materials 11.4%, and Telecommunications 10.7%.  The fund’s expenses will be capped at 0.75% for at least one year. 

The first two Emerging Global Shares (EGS) products were introduced on May 18, and we wrote about them at that time.  They were the EGS DJ Emerging Markets Titans Energy Fund (EEO) and EGS DJ Emerging Markets Titans Metals & Mining Fund (EMT).

I have long been a fan of segmenting the investing universe by sector instead of by country.  I have also long been a fan of emerging markets, so that automatically makes me a fan of these products.  Once the rollout is complete, the EGS funds will allow investors better access to the fast- growing emerging market niches.  The companies represented in the EGS sector funds typically receive little or no allocation in traditional cap-weighted global and international sector products.

Future ETFs from Emerging Global Advisors will cover the basic materials, consumer goods, consumer services, financials, health care, industrials, technology, utilities, and telecommunications sectors of the emerging market countries.

Disclosure:  no positions

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